![FDIC Chairman Martin Gruenberg is facing calls for his resignation from some members of Congress following systemic sexual harassment claims occurring within the agency.](https://cdn.govexec.com/media/img/cd/2024/05/08/050824_Getty_GovExec_FDICreport/860x394.jpg?1715202597)
FDIC Chairman Martin Gruenberg is facing calls for his resignation from some members of Congress following systemic sexual harassment claims occurring within the agency. SAUL LOEB / Getty Images
Committee member behind independent report on FDIC harassment says recommendations don’t go far enough
Despite a 2023 expose into systemic sexual harassment allegations within the agency, one official said accusations of troubling behavior continue to permeate the regulator.
Major changes are likely on the horizon at the Federal Deposit Insurance Corporation following the Tuesday release of an independent report that found the banking regulator was rife with “sexual harassment, discrimination and other interpersonal misconduct.”
But what those reforms should look like, including whether the current chairman should resign, is proving thorny.
The 200-plus page report, developed by the law firm Cleary Gottlieb, makes numerous recommendations to improve the FDIC’s workplace, which it characterizes as a “good ol’ boys club.” These include providing additional mental health resources to victims, establishing more effective performance reviews and training programs and appointing an official to oversee the implementation of the proposals.
However, Linda Miller, who leads a consultancy focused on fraud prevention and served on the FDIC special committee that supervised the investigation, thinks the report’s recommendations do not go far enough.
“There doesn't appear to be many, if any, recommendations in that report specifically aimed at the problem of this risk-averse culture that the report found to be one of the reasons why there wasn't more accountability,” she said. “Because [agency] leadership didn't want to risk a wrongful termination lawsuit. So they simply didn't take action. I believe strongly that there needed to be recommendations around holding people accountable through things like suspensions and pursuing removal when necessary and when warranted.”
Miller emphasized that the special committee took its mission seriously but she argued the proposals aren’t proportional to the problems.
“When something has gone on as long as this went on, and was as egregious and widespread as this behavior was, the response has to be really very convincing that leadership takes it seriously. And I think that without these accountability mechanisms, it doesn't. It doesn't really demonstrate the level of seriousness that I think the FDIC must take,” she said.
A November 2023 Wall Street Journal article headlined “Strip Clubs, Lewd Photos and a Boozy Hotel: The Toxic Atmosphere at Bank Regulator FDIC” spurred the independent investigation, but Miller said even that didn’t change behavior at the individual level.
“When I spoke with the women in [the employee resource] group, some of this behavior was still happening well past the Wall Street Journal report, like as in 2024,” she said. “This behavior was still ongoing, even after the Wall Street Journal reported, even after an independent commission was hired to come in and this independent report by Cleary Gottlieb - the behavior was still happening.”
More than 500 individuals reported to the investigators’ hotline, most of whom were current FDIC employees and who were disproportionately women and people from underrepresented groups. The FDIC reported it had nearly 6,000 employees at the end of 2023.
In one instance, an employee told investigators that she feared for her safety after a colleague who had been stalking her continued to text her even though she made a complaint against him. She made the complaint after he sent her unwelcome messages that featured partially naked women engaging in sexual acts.
Another employee reported that she received a picture of a senior FDIC examiner’s private parts while on detail in a field office. Others in the office later told her to avoid the senior official because he had a “reputation.”
The FDIC inspector general in 2020 reported that the agency had not established an adequate sexual harassment prevention program and should improve its policies, procedures and training.
In a message to employees Tuesday, FDIC Chairman Martin Gruenberg said he accepted the report’s findings and recommendations and apologized to any staff who experienced sexual harassment or other misconduct at the agency. He also highlighted an action plan that the regulator released in December 2023, which states the agency will create a hotline to receive reports of harassing behavior and prohibit bonuses to an individual found to have committed sexual harassment.
“We will spare no effort to create a workplace where every employee feels safe, valued and respected,” he wrote.
Some key lawmakers, however, want Gruenberg out of that workplace. Both House Financial Services Committee Chairman Patrick McHenry, R-N.C., and Senate Banking, Housing and Urban Affairs ranking member Tim Scott, R-S.C., have called on the chairman to resign.
“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,” McHenry said in a statement.
The report discussed instances when Gruenberg — who has been a member of the FDIC Board since 2005, serving as chairman from 2012 to 2018 and again beginning in 2023 —- “[lost] his temper and [interacted] with staff in a demeaning and inappropriate manner.”
The review notes that several individuals said they have experienced entirely professional interactions with the chairman, and he himself told investigators that he did not remember ever getting angry with agency employees.
“[L]eading cultural transformation at an agency that he has led for so long presents unique challenges for Chairman Gruenberg, as do the incidents of—and resulting reputation for— losing his temper and expressing anger with staff,” the investigators wrote. “These attributes may hinder his ability to establish trust and confidence in leading meaningful culture change, and so too may his apparent inability or unwillingness to recognize how others experience certain difficult interactions with him.”
Senate Banking Committee Chair Sherrod Brown, D-Ohio, said in a statement that Gruenberg “must accept responsibility” and “immediately work to make fundamental changes” to the FDIC, but did not call on him to resign.
House Financial Services Committee ranking member Maxine Waters, D-Calif., did not respond to a request for comment, but did say in an interview with Punchbowl News that Gruenberg should not resign.
On the other hand, Rep. Bill Foster, D-Ill., a senior member of the Financial Services panel, wants a change in command at the FDIC.
“Sweeping changes must be made to mend the toxic work environment that has run rampant for far too long, and that starts with a change of leadership. It is time for Chair Gruenberg to resign,” he said in a statement.
If Gruenberg exits, there would be a 2-2 split between Democrats and Republicans on the FDIC Board.
White House Press Secretary Karine Jean-Pierre deferred questions about the harassment report to the FDIC.
"My understanding is that the FDIC chairman spoke to this. He apologized and has committed to the recommendations that have been provided by the independent report and going to further fix the longstanding issues, obviously, that are in the report," she said in a press briefing on Tuesday..