Federal watchdog launches probe into agency leadership that allegedly allowed widespread harassment to fester
Congressional committees and the agency itself is already conducting investigations into the alleged toxic workplace.
A federal watchdog has launched an investigation into alleged harassment and misconduct by leadership at the government’s top bank regulator following reports that it enabled a toxic work environment.
The Federal Deposit Insurance Corporation’s inspector general is creating a “special inquiry” into how FDIC leadership has dealt with complaints involving sexual harassment and other inappropriate behavior by supervisors and others, as first reported on Tuesday by Reuters. The probe will also examine whether the agency has taken follow up actions after the IG found in 2020 FDIC did not have policies and procedures in place for preventing or reporting sexual harassment.
The announcement follows the agency itself saying last week it would create a “special committee” to investigate the allegations internally. Key congressional committees, led by members of both parties, have either launched their own probes or called for the IG to conduct one.
The backlash began after The Wall Street Journal earlier this month reported incidents of FDIC supervisors taking employees to strip clubs, sending lewd photos, engaging in and discussing sexual acts and taking other actions dating back more than a decade that created a toxic work environment. Many women quit their jobs over the behavior, according to the report, which found FDIC Chair Martin Gruenberg had bullied employees and helped personally cultivate a culture that allowed harassment and discrimination to fester. Employees also said they often feared retaliation if they reported wrongdoing.
Some Republican lawmakers have called on Gruenberg to resign, while members of both parties are seeking further information on his leadership and the environment at the agency. Republicans on the House Committees on Financial Services and Oversight and Accountability launched their own probe into the matter, while Democrats on the Senate Banking Committee, led by Chairman Sherrod Brown, D-Ohio, asked the agency’s inspector general to investigate it. The agency previously said it hired a law firm to review the allegations.
Lawmakers had expressed concerns that FDIC leadership could puts its thumb on the scale of any internal review, but at least some members were satisfied with the agency’s updated approach.
“The FDIC Board has taken appropriate steps so that the oversight of the outside firm’s assessment of the agency’s culture can proceed independently,” Brown said. “I will review the completed assessment and any recommendations or actions that can protect workers and strengthen the FDIC and our financial system.”
Gruenberg—who has served on the FDIC board since 2005 and is now on his second stint as chairman—told lawmakers earlier this month he was unaware of the issues within his agency, but conceded a problem clearly existed and such behavior should not have been tolerated.
Rep. Patrick McHenry, R-N.C., who chairs the House Financial Services Committee, has pledged to use his panel's “full arsenal of oversight and investigative tools, including compulsory mechanisms," to conduct his investigation. The oversight committee has requested for all records relating to complaints and investigations into inappropriate behavior by FDIC employees, information from a law firm investigating the claims, related communications from FDIC human resources, documents from Gruenberg's office and a list of employees reassigned due to sexual harassment allegations.