Review of Agency Culture at FDIC Suggests Challenges for Managers

Throughout the federal government, federal managers work tirelessly to serve their agencies and the public. Unfortunately, there are often situations in which an agency’s environment may place managers and employees in difficult situations. Recently, an independent review released by law firm Cleary Gottlieb Steen & Hamilton describes an environment that fostered “hostile, abusive, unprofessional, or inappropriate conduct” at the Federal Deposit Insurance Corporation (FDIC). The report outlines incidents of stalking, harassment, homophobia and other violations of employment regulations as reported by over 500 workers.

According to the review, a patriarchal and risk-averse culture contributed to the conditions that allowed for this workplace misconduct to occur and persist. A widespread fear of retaliation and lack of clarity and credibility around internal reporting channels has led to an underreporting of workplace misconduct over the years.

With alleged failures of FDIC management referenced throughout the review as contributing factors, agency managers will be held accountable for the alleged culture at the agency. They will also be largely responsible for implementing future changes intended to create a better workplace. Managers throughout the FDIC will feel the effects of being placed under the microscope of Congressional and media scrutiny—are you prepared to face that same scrutiny? Outside investigations and reviews may leave managers vulnerable to investigations, disciplinary action, and even lawsuits. If this happens, it is crucial that you have the tools you need to defend yourself – a professional liability insurance (PLI) policy from FEDS Protection can help.  

Revelatory Review

In November 2023 the Wall Street Journal published an investigation that outlined details of the FDIC’s workplace culture, which prompted the FDIC board to initiate an independent review.

The review highlighted FDIC Chairman Martin Gruenberg’s behavior – including “deeply unsettling exchanges” with subordinates, threats to employees, and instances of losing his temper – calling into question the credibility of FDIC leadership. In response to the investigation, there were calls for the Chairman’s resignation from both sides of the aisle on Capitol Hill.

Formal Findings

The review identified contributing factors for the workplace misconduct and culture issues, several of which directly call FDIC managers’ actions – or inactions – into question.

For example, the review suggests that management failed to consistently prioritize a positive workplace culture for all employees and failed to emphasize leadership skills among managers.

According to the review, management failed to implement and communicate effectively about proper reporting channels, which contributed to underreporting and insufficient response to allegations of misconduct.

Additionally, the investigation found that management failed to maintain proper records of complaints and allegations that would permit FDIC leadership to keep track of information related to workplace misconduct.

Culture Changes

The review suggests that cultural and structural changes are necessary to foster a safe environment for all agency employees. To ensure that type of environment is achieved the following recommendations were given: protect the victims, transform the culture, hold leadership accountable, enact policy enhancements and additions, enhance training programs, improve structures and procedures, and implement greater transparency.

The responsibility of implementing and maintaining these recommendations will primarily be on managers and supervisors within the agency. This new responsibility can make them more susceptible to scrutiny by other agency employees and the public. Additionally, FDIC managers may come under fire for following previous policies that are now being criticized and reevaluated.

As a federal manager, you need to have counsel that has specific federal experience representing you and your professional vulnerabilities regarding civil lawsuits and workplace allegations. As the professional liability insurance (PLI) provider endorsed by the leading federal employee associations, FEDS Protection can help.

FEDS Protection for Managers and Supervisors

FEDS Protection offers federal employee PLI policies with $1 million, $2 million, or $3 million in civil liability protection for attorney’s fees and indemnity costs in the event you are sued in your civil capacity.  The FEDS policy also includes $200,000 of legal representation coverage per incident for administrative actions and $100,000 of coverage for criminal defense costs.  Annual premiums for FEDS Protection PLI start at just $290.  Additionally, federal managers and law enforcement officers are eligible for a reimbursement of up to 50% the cost of their PLI policy through their agency. To learn more about how a FEDS PLI policy can protect you and your career, visit www.fedsprotection.com or call (866) 955-FEDS, M-F 8:30am-6pm.

*This article is provided for informational purposes only and does not constitute legal advice.