Sexual harassment, bullying, and discrimination have long been pervasive issues at the Federal Deposit Insurance Corp. (FDIC), often resulting in reassignments and even promotions for perpetrators, according to a scathing report on the agency's culture. The report, conducted by law firm Cleary Gottlieb Steen & Hamilton and released on Tuesday, raises questions about the leadership of Chairman Martin Gruenberg.
The report was commissioned by the FDIC following a Wall Street Journal investigation in November that revealed a toxic workplace culture at the agency. More than 500 current and former FDIC employees, out of a total staff of fewer than 6,000, shared their experiences of misconduct at the agency with the law firm.
The report underscores the pressing need for a workplace free from sexual harassment, discrimination, and other forms of misconduct, which many employees currently do not have. It includes numerous examples of misconduct, such as executives known for pursuing relationships with subordinates being promoted or transferred instead of facing discipline. Other incidents include a senior FDIC examiner sending explicit photos to a colleague and another executive frequenting brothels with coworkers during work trips.
Additionally, a Hispanic employee was asked to recite the Pledge of Allegiance to prove their American identity.
The report also confirms that many female bank examiners left their positions due to such experiences. Furthermore, it reveals that multiple employees, including senior leaders, have had difficult interactions with Chairman Gruenberg, feeling disrespected and treated unfairly. Despite calls for his resignation, Gruenberg, a Democrat nominated by President Biden for a second term in 2022, has resisted, claiming he was generally unaware of the toxic culture.
While the report does not provide specific recommendations regarding disciplinary action for Gruenberg and other senior leaders, it highlights the challenges Gruenberg faces in leading the necessary cultural and structural overhaul due to his long tenure and reputation for losing his temper.
In response to the report's findings, some lawmakers have renewed calls for Gruenberg's resignation. The FDIC has formed a special committee to oversee cultural transformation at the agency, recognizing the need for significant change in leadership to address the issues identified in the report.