FDIC Investigation Reveals Rampant Sexual Harassment, Discrimination and Other Workplace Misconduct

A report released on Tuesday May 7, 2024, by Cleary Gottlieb claims that the Federal Deposit Insurance Corporation (FDIC) needs a cultural and structural change due to an excess of sexual harassment, discrimination, bullying and other misconduct that had not been addressed by management. Chairman, Martin Gruenberg, has also been accused of belittling and losing his temper with his staff when interacting with them.

The FDIC currently has around 6,000 employees in their workforce and at least 500 described their experiences as part of an independent investigation led by Cleary Gottlieb Steen & Hamilton. The outside investigation was ordered last year by a special bipartisan committee in response to various stories that were published in The Wall Street Journal. The report states that throughout the years the agency has failed to provide a safe work environment where employees are protected from sexual harassment, discrimination, retaliation, and other misconduct. However, the response to the allegations has been inadequate and non-effective.

According to the report, none of the harassment complaints that have been made from 2015 to 2023 resulted in any disciplinary actions or reductions in grade or pay. Of 92 complaints made through an anti-harassment program only two resulted in suspension, two in letters of reprimand, and twelve in counseling or trainings. The lack of accountability comes from a culture that focuses on the risks that could come from taking disciplinary action instead of considering the overall damage that is caused by years of not holding employees accountable.

Chairman Gruenberg was not found entirely culpable for the rampant sexual harassment and discrimination in the agency, however many employees emphasized how these workplace culture issues often start with upper management positions. The lack of action towards the pervasive misconduct caused the investigators to question the credibility of Chairman Gruenberg when considering his response to the crisis and whether he possesses the moral authority to lead a transformation in the workplace.

Representative Patrick McHenry (R-N.C.), chair of the House Financial Services Committee, condemned Chairman Gruenberg’s behavior and called for new leadership at the FDIC. Sen. Joni Ernst (R-Iowa) also called for new leadership after stating that the culture that the Chairman has perpetuated is a clear result of a failure in leadership.

On Tuesday May 7, 2024, Chairman Martin Gruenberg released a statement to his employees recognizing the findings of the investigation and informing them of his plans to stay at the agency. He took responsibility for any workplace culture issues he had overlooked and apologized for any harassment or misconduct any employee has experienced at the FDIC.

Another member of the House Financial Services Committee, Rep. Bill Foster (D-Ill.), called for Chairman Gruenberg’s resignation. Karine Jean-Pierre, White House Press Secretary, declined to comment on President Biden’s view on the Chairman’s leadership. Rep. Maxine Water, a member of the House Financial Services Committee, stated it’s up to the FDIC’s board to decide if Chairman Gruenberg’s resignation will be requested.

The investigation and report are a result of members of the FDIC seeking to more regulations against banks. These regulations include an increase in capital requirements that the industry has been fighting. The FDIC has recently published a draft rule to place more guardrails around financial executive pay packages. The agency has been actively scrutinizing larger investment companies’ stakes in banks and placing stricter guidelines regarding bank mergers.

The FDIC has two other separate investigations that have been ordered by the agency’s investigator General. Reports are expected to be produced later this year. The director of the Consumer Financial Protection Bureau, Rohit Chopra, demands that the agency implement the recommended reforms to ensure a safe workplace free of discrimination or harassment. In a statement released after the investigation reports were made public, he said that the reports “confirm that there are serious, long-standing issues withing the FDIC that must be addressed.”