The FDIC is a 'boys club' where some senior execs pursued romantic relationships with their staff, says new report
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The Federal Deposit Insurance Corporation has a "patriarchal" culture, an independent report says.
The report notes that the bank regulator has taken no action on dozens of harassment complaints.
Investigators have raised doubts about the FDIC chairman's ability to transform the culture.
A key US bank regulator has a "patriarchal" and "insular" culture and is led by a chairman with a reputation for a strong temper, an independent report released on Tuesday says.
The 234-page summary of the monthslong investigation, led by the external law firm Cleary Gottlieb Steen & Hamilton, highlights long-standing and recent issues at the Federal Deposit Insurance Corporation. The report says that the FDIC has dismissed myriad harassment complaints and that wrongdoers are moved around internally or promoted.
The law firm's report builds on a damning November story from The Wall Street Journal about the FDIC's toxic work culture and has come as the FDIC faces a probe from the House of Representatives.
Investigators say they set up a hotline in mid-January and received more than 500 complaints — largely from current employees — about sexual harassment, discrimination, and other issues. The FDIC has about 6,000 employees.
Tuesday's report characterized the FDIC's culture as "'misogynistic,' 'patriarchal,' 'insular,' and 'outdated'—a 'good ol' boys' club where favoritism is common, wagons are circled around managers, and senior executives with well-known reputations for pursuing romantic relations with subordinates enjoy long careers without any apparent consequence."
While the FDIC operates an anti-harassment program, the report says it's ineffective. Of the 92 complaints the FDIC received from 2015 through 2023, none resulted in more serious discipline than a suspension — and only two warranted suspensions, while 78 led to no discipline. Investigators say many employees didn't report issues because they feared retaliation.
Investigators say one employee told them she "feared deeply for her physical safety" after her colleague, who was stalking her, kept texting her sexually explicit messages, even after she made a complaint against him. Staff from underrepresented groups said they were told they were "token" employees meant to fill quotas.
Tuesday's investigation builds on a 2020 report from the FDIC's inspector general that found the regulator hadn't created an "adequate" program for the reporting and prevention of sexual harassment. The earlier report also noted widespread fear of retaliation.
The independent investigators spent nine pages discussing the conduct of the FDIC chairman, Martin Gruenberg. They say they've heard "credible reports" of Gruenberg's temper, including in meetings as recently as May 2023.
"As the FDIC faces a crisis relating to its workplace culture, Chairman Gruenberg's reputation raises questions about the credibility of the leadership's response to the crisis and the 'moral authority' to lead a cultural transformation," the report says.
Gruenberg said in a statement on Tuesday to employees, released to the public, that he took responsibility for the agency, including its culture. The 71-year-old Democrat has spent nearly a decade in the role under multiple presidential administrations.
"I also want to apologize for any shortcomings on my part," he said.
After the report's publication, some lawmakers from both major parties called for Gruenberg's exit. His departure would put the vice chairman, Travis Hill, a Republican, in the interim seat.
On Tuesday, the White House press secretary, Karine Jean-Pierre, didn't say whether the president still had confidence in Gruenberg.
She said Gruenberg "apologized and has committed to the recommendations" from the law firm.
The FDIC didn't immediately respond to a request for comment from Business Insider sent outside standard hours. The agency hasn't issued a statement beyond Gruenberg's Tuesday message to employees.
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