Key insight: The FDIC's inspector general concluded that most whistleblower allegations relayed by Sen. Joni Ernst were unsupported, previously resolved or based on incorrect assumptions about spending, staffing and travel.
Supporting data: Reviews found no anomalous year-end spending of Deposit Insurance Fund money, equipment purchases were appropriate, hiring was sound and alleged travel fraud by a senior manager was negligible and saved the agency money.
Forward look: The review is aimed at "closing out" the allegations and leaves the agency with little new evidence to pursue further action.
The Federal Deposit Insurance Corp.'s inspector general sent a letter recently pushing back on a number of allegations of fraud and abuse at the agency, saying the allegations were either exaggerated instances of minor discrepancies or unsubstantiated.
The Federal Deposit Insurance Corp.'s Inspector General Jennifer Fain last refuted or narrowed a series of misconduct allegations Sen. Joni Ernst, R-Iowa, alleged on behalf of an anonymous whistleblower against agency staff in April. In a letter sent last month to the Iowa Republican, Fain refuted the vast majority of the fraud, favoritism and misappropriation alleged within the agency's watchdog office. Fain — who leads the agency tasked with monitoring the FDIC — says the OIG's office has since conducted internal reviews, shared documentation with Ernst's staff and resolved any discrepancies.
"Your letter requested my help in getting to the bottom of the allegations that you conveyed and invited me to use this opportunity to work together to address these issues," Fain wrote to Ernst. "I hope the extensive information that we have provided to your staff, and this response, demonstrates that we take all allegations seriously … our reviews have found that [many of] the allegations were not supported by the evidence we identified and have shared with your staff."
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According to Ernst, whistleblowers had also alleged an OIG official also fraudulently assigned himself temporary duty in multiple cities to cover personal travel costs and made improper mass purchases of equipment on the company dime.
Fain wrote in response that budget data shown to Ernst's staff showed "no anomalous year-end spending" or siphoning of DIF funds, and that OIG law-enforcement equipment purchases cited by whistleblowers were justified by security needs.
In reaction to the allegation that OIG leadership wrongfully created a Miami field office in 2023 to benefit certain employees, Fain refuted this outright, noting the creation of a Miami field office predated the personnel moves in question and was supported by the higher prevalence of fraud in the area.
"Your letter stated that the Miami region was created in 2023 … the OIG [actually] established a field office in Miami in 2019," Fain wrote. "Establishment of this office was considered as early as 2017 due to the amount of work that the OIG was conducting in Miami, which is a major hub of financial fraud, and the travel expenses that the OIG was incurring to investigate cases in Miami."
The OIG also pushed back on allegations of unfair favoritism at the inspector general's office, saying similar complaints had been made before and were previously reviewed and closed by a third-party committee overseeing agency watchdogs.
"These allegations have been previously made and reviewed by the Integrity Committee of the Council of Inspectors General on Integrity and Efficiency[, which] requested additional information from the subjects of the allegations," Fain wrote. "They provided documentation to explain their role in the process and counter the allegations. After reviewing these responses, the Integrity Committee decided to close the matter without further action."
Fain noted that the agency had grappled with shortcomings in hiring in the past, but that they did not amount to the allegations. An independent review examining hiring practices from 2022 to 2024 found some recordkeeping shortcomings, but Fain says no hires violated the law and there was no evidence of favoritism. The appearance of a pipeline whereby staff from other agencies often migrated to the FDIC OIG may have contributed to these perceptions, Fain said, but such a dynamic was a result of transferable expertise, not favoritism.
"The review also found that hiring a large number of employees from one agency may have contributed to employee perceptions of favoritism in the process," Fain wrote. "But counter to the allegations … this agency was not HHS OIG [as alleged] – it was the Department of the Treasury, [an agency with a] clear overlap and nexus between the financial crimes investigations conducted by Treasury and FDIC OIG."
Claims of retaliation were referred to the Office of Special Counsel, which did not find any evidence to investigate. Still, all OIG staff were required to complete training on prohibited personnel practices, the letter noted.
On the most specific allegation, that a senior manager fraudulently claimed Washington, D.C., locality pay while using official travel to subsidize living in Florida, Fain said an extensive review of time cards, travel vouchers, building access logs and technological records did not substantiate fraud.
The senior manager properly updated his residence with the agency in 2022 and did not falsely claim Washington, D.C., locality pay, wrote Fain, noting that he split his time between in-office work in Arlington, work travel and telework in line with policy.
The OIG noted that while reviews of the employee's travel vouchers did identify paperwork discrepancies, all errors totaled $122.44 owed by the senior manager. The OIG said the senior manager's practice of traveling from his residence instead of his duty station ultimately saved the FDIC money.
"Overall, [the employee's] election to travel from his residence instead of the official duty station in 2023 and 2024 resulted in savings to the FDIC of more than $5,000," Fain argued. "This is because the costs of travel from his residence were generally lower than costs of travel from Washington, D.C. or Miami. When costs from the duty station would have been lower than travel from his residence, Mr. Sallows was only reimbursed for the lower amount and not his actual expenses."
