Following the release of an independent review of activity at the Federal Deposit Insurance Corporation (FDIC) which sites misconduct and a toxic workplace, Congressman Patrick McHenry is calling on FDIC Chairman Martin Gruenberg to resign. McHenry is the Chairman of the House Financial Services Committee, which has oversight of the agency. The review was overseen by the Special Committee of the FDIC Board of Directors.
Posted today on the FDIC website, the independent review conducted by Cleary Gottlieb validated much of the criticism that has been rumored for some time about activity at the agency.
According to the release, over 500 current and former FDIC employees shared their stories with Cleary Gottlieb. The Committee lauded the “exceptional bravery” of employees who shared their insight into the FDIC’s activities.
The 234-page document shared that between January 2015 and April 2018, approximately 8% of the respondents (191 of 2,376) had experienced sexual harassment at the FDIC. The report claims that harassment may have been underreported due to fear of retaliation.
Based on the findings, 15 recommendations were proposed for the FDIC to more effectively prevent and address sexual harassment.
These recommendations fell into four broad categories, including (1) improving policies and procedures related to responding to sexual harassment misconduct allegations; (2) promoting a culture in which sexual harassment is not tolerated, and such allegations are investigated and resolved promptly; (3) ensuring consistent discipline; and (4) enhancing training for employees and supervisors.
The report stated that Chairman Gruenberg has a “reputation within the FDIC for a temper.” To quote the report:
“… we did also learn of credible reports of outbursts, including over the last few years, some of which were corroborated by contemporaneous messages, where FDIC staff, including senior executives, have felt disrespected, disparaged, and treated unfairly. While not the root cause of the sexual harassment, discrimination, or other workplace misconduct impacting the agency as a whole, a number of people noted that tone and culture flows from the top down, and having a leader with a reputation of this type does create certain challenges in leading a cultural transformation that prioritizes a more positive workplace culture.”
Congressman McHenry issued the following statement upon the release of the review:
“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. 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. The FDIC must be held to the same standards of conduct it imposes on the entities it regulates. The agency’s culture must be overhauled. Our banking system needs regulators who are focused on the safety and soundness of our financial institutions. At the same time, federal employees and civil servants deserve to be treated with respect at work. This report affirms the FDIC has failed to meet these standards. This is unacceptable. As the House Financial Services Committee continues its own investigation, Republicans will ensure Chair Gruenberg and other senior leaders at the FDIC are held accountable.”
Gruenberg became the Chairman of the FDCI in January 2023. He previously served as Senior Counsel to Senator Paul S. Sarbanes (D-MD) on the staff of the Senate Committee on Banking, Housing, and Urban Affairs from 1993 to 2005. He also served as Staff Director of the Banking Committee’s Subcommittee on International Finance and Monetary Policy from 1987 to 1992. It would be surprising for Gruenberg to remain in his current position following the publication of the report. At this point, he is an embarrassment to the FDIC as well as the Biden administration.
