FDIC Investigation Finds Culture Rife With Sexual Harassment, Discrimination

Sexual harassment, bullying and discrimination have long pervaded the Federal Deposit Insurance Corp., with perpetrators often receiving reassignments and even promotions, according to a blistering report on the agency’s culture that calls into question the leadership of Chairman Martin Gruenberg.

The report, crafted by law firm Cleary Gottlieb Steen & Hamilton and described by people familiar with the matter, was commissioned by the bank regulator after a Wall Street Journal investigation in November revealed a toxic workplace culture at the agency. The FDIC is expected to make it public later today.

More than 500 employees at the agency out of fewer than 6,000, most of them current, subsequently contacted the law firm to recount their experiences of misconduct at the agency.

They include women being subjected to naked photos from senior bank examiners and male supervisors visiting strip clubs and making lewd comments to female colleagues, driving many to quit, the Journal reported.

The review also found instances of verbally abusive behavior by Gruenberg, who has spent nearly two decades at the FDIC. The report found that FDIC employees, including senior leaders, had felt disrespected and poorly treated by Gruenberg and that the chairman was perceived as unable to control his temper.

After the Journal’s investigation was published, Gruenberg, a Democrat, said he had been generally unaware of allegations of a toxic culture and resisted calls from Republican lawmakers to resign.

The report isn’t expected to make a recommendation on whether Gruenberg and other senior leaders should face discipline or removal, which was outside investigators’ scope. But it will say his long tenure at the agency and reputation for losing his temper could complicate his ability to lead a cultural overhaul.

Gruenberg, nominated by President Biden to lead the agency for a second term in 2022, joined the FDIC board in August 2005 and has led the agency for nearly 10 of the last 13 years.

In a message to staff Tuesday before the report’s release that was seen by the Journal, Gruenberg said employees “reported painful experiences of mistreatment and feelings of fear, anger, and sadness.”

“To anyone who experienced sexual harassment or other misconduct at the FDIC, I again want to express how very sorry I am,” he wrote. “I also want to apologize for any shortcomings on my part.” He pledged to address the recommendations in the report, citing the 13-page action plan the agency released in December.

Among the report’s findings is that employees had reported misconduct by several managers given leadership roles related to the action plan.

This story will update as news develops.

Write to Rebecca Ballhaus at [email protected] and Andrew Ackerman at [email protected]