Lawmakers zero in on 'disturbing' cultural problems at the FDIC

Sarah Silbiger/Bloomberg

WASHINGTON —  In the aftermath of a report from The Wall Street Journal on Monday that described widespread problems at the Federal Deposit Insurance Corp., leading Republicans on the House Financial Services Committee are asking that the FDIC's inspector general hold a briefing later this month about the agency's culture. 

The article described "disturbing" problems at the FDIC which, the lawmakers said in a letter, "maintains a culture that perpetuates sexual harassment, misogyny, and other acts of misconduct." The article alleges that female examiners quit the agency after experiencing a heavy drinking culture and instances of sexual harassment or improper workplace conduct, notably at a hotel near Washington that hosts the agency's out-of-town employees. The article outlines incidents that include a supervisor inviting employees to a strip club, and male examiners sending nude photos to female colleagues. 

FDIC Chairman Martin Gruenberg, who testified in front of the Senate Banking Committee on Tuesday, said that the agency has hired a third-party law firm to conduct an independent review. The study is expected to be completed within 90 days, he said, and added that agency management would assure employees that they could raise complaints confidentiality. 

"I am personally disturbed and deeply troubled by this report," Gruenberg said in Tuesday's Senate Banking Committee hearing. 

He later continued: "Let me underscore, I have no higher priority than to ensure that all FDIC employees work in a safe environment where they feel valued and respected." 

On the House Financial Services Committee, which will hear from Gruenberg on Wednesday along with other financial regulators, top Republicans, including Chairman Rep. Patrick McHenry of North Carolina; Chairman of the Subcommittee on Financial Institutions and Monetary Policy Bill Huizenga of Michigan; and Chairman of the Subcommittee on Financial Institutions and Monetary Policy Andy Barr of Kentucky, invoked the panel's oversight authority over the FDIC in a letter to the agency's inspector general.

"The Committee on Financial Services takes these allegations very seriously, and any misconduct must be addressed," the lawmakers said in the letter. "This Committee not only has a duty to oversee the execution of the laws by the Administration, but we must also ensure that civil servants of our financial regulators are able to perform their duties without fear of harassment or retaliation." 

The lawmakers said that the Office of the Inspector General for the agency noted in a 2020 report that the FDIC had not established an adequate sexual harassment prevention program. That, according to McHenry and the other lawmakers, seems to confirm "the longstanding pattern of FDIC employees creating an unsafe work environment for their colleagues and a failure of the FDIC to take appropriate corrective action." 

The issue of female examiners leaving the agency cuts into the FDIC's existing staffing problems. The FDIC's banking examiners came under the spotlight earlier this year after the failure of Signature Bank, one of the three large regional institutions to fail in a short period. In an April report following the failures, the FDIC said that its examiners noticed issues at the bank too slowly, in part because of a staffing shortage in its New York office. The report referred to this problem as "resource challenges."