WASHINGTON — An independent examination of Federal Deposit Insurance Corp. workplace culture released Tuesday painted a picture of an agency with rampant instances of sexual harassment, discrimination, and various other forms of misconduct spanning several years.
The report,
"Far too many FDIC employees — substantially more than those who have previously reported internally — have suffered from sexual harassment, discrimination, and other forms of interpersonal misconduct for far too long," the report noted. "We find that aspects of the FDIC's culture and structure — including a lack of accountability, fear of retaliation, a patriarchal, hierarchic, insular and risk-averse culture, power imbalances, insufficiently clear guidance and reporting channels, inadequate recordkeeping, and an investigative process that lacks credibility internally — have contributed as root causes to the conditions that have allowed for this type of workplace misconduct to occur."
Over a span of five months, investigators took testimony from more than 500 individuals, primarily current FDIC employees. The firm also conducted interviews with another 167 individuals and meticulously reviewed thousands of related documents uncovering hundreds of instances of misconduct, some occurring as recently as weeks before the report's publication on Tuesday.
The misconduct detailed in the review ranged from inappropriate and racially discriminatory comments towards minorities to instances of sexual harassment, stalking and unwelcome advances — mostly towards women — at the agency. These incidents occurred across various levels of the organization, from field offices to agency headquarters. The misconduct, according to the report, often went unaddressed, with wrongdoers being moved to different positions rather than facing official sanction. Employees also reported a fear of retaliation within the FDIC, which they said discouraged them from reporting instances, while those who did make reports faced job loss or reprisal.
In one instance, one employee stalked and sent unwelcome sexualized text messages to a female employee, which the female employee said instilled her with fear for her physical safety despite her complaints to superiors. In other instances female employees endured routine sexual objectification by their supervisors, who made inappropriate comments about their bodies. Another supervisor reportedly mocked an employee with a disability by calling them offensive nicknames. Employees of color reported receiving remarks from colleagues speculating that they had only been hired to fill diversity quotas, and black employees in particular cited instances of disparate interpersonal treatment as well as being passed over for promotions in favor of their white colleagues. Homophobic remarks were also reported, with a supervisor referring to gay men as "little girls."
Chairman Martin Gruenberg's conduct and reputed temper — previously
While Gruenberg's conduct was not cited as a root cause of the pervasive misconduct at the agency, the report acknowledges challenges posed by his leadership style and emphasizes the need for a genuine commitment to cultural transformation, including a candid acknowledgment of past shortcomings.
"We do find that — as a number of people we spoke to in our review have noted — 'tone at the top' is important and that positive workplace culture needs to be modeled and reinforced from the top down," the report noted. "As the FDIC faces a crisis relating to its workplace culture, Chairman Gruenberg's reputation raises questions about the credibility of the leadership's response to the crisis and the 'moral authority' to lead a cultural transformation."
Gruenberg acknowledged the seriousness of the findings, expressing regret and assuming responsibility for the agency's failings.
"To anyone who experienced sexual harassment or other misconduct at the FDIC, I again want to express how very sorry I am," he said. "As Chairman, I am ultimately responsible for everything that happens at our agency, including our workplace culture."
The report made seven recommendations to help improve workplace culture, and prevent further harassment, discrimination, and misconduct within the FDIC.
It suggests the agency support victims of misconduct through enhanced mental health resources, appointing a Culture and Structure Transformation Monitor to oversee necessary changes, holding leadership accountable through improved performance evaluations, developing and communicating additional policies such as Anti-Fraternization and Anti-Retaliation Policies, implementing comprehensive training programs for all employees, restructuring oversight and investigation processes for better efficiency and reliability and fostering greater transparency through improved communication about investigations and annual surveys.
The report's release will bring renewed skepticism towards Gruenberg, who faced Congressional
Outgoing House Financial Services Chairman Rep. Patrick McHenry, R-N.C., swiftly called for Gruenberg's resignation following the report's release.
"It's time for Chair Gruenberg to step aside. The independent report released today details his inexcusable behavior and makes clear new leadership is needed at the FDIC," said McHenry. "This report confirms the toxic workplace culture at the FDIC — which starts at the top — has led to entrenched and widespread misconduct at the agency."
Rep. Bill Huizenga, chairman of the House Financial Services Subcommittee on Oversight and Investigations, which has been conducting its own investigation into the allegations of workplace misconduct at the FDIC, also told American Banker that Gruenberg should resign.
"Today's independent report by Cleary Gottlieb makes it clear that Chair Gruenberg is not the right person to lead a much needed cultural overhaul at the FDIC," he said. "Chairman Gruenberg should resign immediately to allow the healing and reform process to begin. I urge all of my colleagues to join me in demanding the same."
At least one Democrat, Rep. Bill Foster, D-Ill., also called for Gruenberg's resignation.
"I am appalled and deeply disturbed by the details of widespread sexual harassment and discrimination at the FDIC outlined in the report released today, and I commend the brave individuals who came forward to shed light on these abuses," Foster said. "Sweeping changes must be made to mend the toxic work environment that has run rampant for far too long, and that starts with a change of leadership. It is time for Chair Gruenberg to resign."
The White House fell short of calling for Gruenberg's resignation, but a spokesman declined to say if President Biden still had confidence in the agency's leadership.
"It's an independent agency, as you know, the president of course expects the administration to reflect the values of decency and integrity and to protect the rights and dignity of employees," said White House spokesperson Karine Jean-Pierre in a briefing on Tuesday. "My understanding is the FDIC chairman spoke to this, he apologized and has committed to the recommendations provided by the independent report and going to further fix the longstanding issues that are in the report. But I don't have any thing beyond that. But he apologized, I would refer you to that."
Many industry experts have long
Gruenberg said in a statement that he is up to the challenge of reforming the FDIC's workplace culture.
"We will spare no effort to create a workplace where every employee feels safe, valued, and respected," said Gruenberg. "Making meaningful and sustained change to our workplace culture will not be easy … [but] I believe that we can and we will rise to this challenge, as we have so many others over the past 90 years."
