Five FDIC officials engaged in workplace misconduct: Report

Al Drago/Bloomberg

The Office of Inspector General released a second report on toxic workplace culture at the Federal Deposit Insurance Corp., providing new details about allegations of inappropriate conduct and demeaning behavior by former Federal Deposit Insurance Corp. Chairman Martin Gruenberg and four senior FDIC officials. 

The OIG report, released Tuesday, describes how the five officials, including Gruenberg, "personally engaged in some degree of inappropriate workplace conduct." Gruenberg left the agency in January. Each of the four senior officials, whose names were redacted in the report, has retired or resigned. 

"Certain actions of these senior officials did not protect victims of harassment, nor consistently align with the FDIC's applicable policies and stated core values (including accountability, fairness, and integrity)," the report said. 

The report and investigation were launched in 2023 after the Wall Street Journal published an article describing a "heavy drinking culture" at the FDIC that included visits to strip clubs and lewd parties. 

The report found that Gruenberg "viewed the WSJ articles as a political attack rather than focusing on the underlying issues the articles described," and that witnesses said "he seemed more interested in protecting himself than fixing the problems," according to the report, which corroborated details in the WSJ article.

The FDIC agreed to settle allegations with some employees who complained about the four senior officials, and at least one official was promoted after a settlement.

Last year, a senior official filed a complaint and received a settlement after claiming that Gruenberg retaliated against him and excluded him from projects and meetings for "presenting differing views on the meaning and seriousness of the allegations raised in the WSJ articles." 

The OIG report also found that three of the senior officials had assisted each other "in discreetly and expeditiously resolving complaints when allegations of misconduct arose against them."

Further, the resolution of allegations against the three officials "did not always accord with relevant FDIC policies and were not well-documented," which validated concerns raised by many FDIC employees that "differing standards were applied to senior leaders and other FDIC employees," the report said.  

The FDIC responded to the OIG report last week by saying it took "corrective action, as appropriate." The FDIC did not pay bonuses to the five officials last year, after withholding yearly performance bonuses to a dozen senior officials. The FDIC is taking steps to ensure that employees at the agency feel "safe, valued, and respected," the agency said. It has also taken steps to implement an effective anti-harassment program structure.

Further, the FDIC has new leadership under the Trump administration with acting Chairman Travis Hill and two Republican board members in Comptroller of the Currency Jonathan Gould and Russell Vought, the acting director of the Consumer Financial Protection. 

The FDIC currently has two vacancies on its board because President Trump has refused to appoint any Democrats to the board, a tactic he has used at other agencies as well. 

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The report described in more detail several settlements the FDIC paid for allegations of harassment, discrimination and a hostile work environment. In one example, a senior official allegedly berated a staff member in what the report described as "public floggings." One complaint against the unnamed official was settled for $150,000; a second was settled for $40,000. 

The FDIC also settled an Equal Employment Opportunity complaint alleging that a second senior official subjected an employee to harassment and a hostile work environment. The employee was reassigned to a different position and reimbursed $5,000 in attorney's fees. 

[Separately, in 2000, the FDIC settled a racial discrimination lawsuit for $15 million after an eight-year legal battle that involved allegations of discrimination in promotions and other employment practices against current and former black employees.]

In yet another settlement, an employee was paid $10,600 after alleging she felt humiliated and demeaned by a senior official, who the report said had been accused by some managers of using his supervisory authority "to punish employees who disagreed with him or he perceived as disloyal."

The OIG conducted 69 interviews with current and former FDIC employees and reviewed more than 280,000 records for its investigation.