
Buffeted by reports of abuse and harassment at his agency, Federal
Deposit Insurance Corp. (FDIC) Chair Martin Gruenberg said he would resign once
a successor is confirmed, The New York Times and other news organizations reported.
Gruenberg came under fire last year after a Wall
Street Journal series revealed a toxic atmosphere at the agency. The
story prompted the FDIC to commission an investigation by the law firm Cleary
Gottlieb, which released
its report this month, the Times reported.
Investigators spoke to more than 500 employees at the FDIC, most of them current, who “painfully and
emotionally” recounted their experiences of misconduct at the agency, the
Journal reported. The agency lists 5,280 employees in its permanent workforce. The 234-page report included examples of misconduct,
such as executives who engaged in interoffice relationships with subordinates but were promoted or moved rather than facing discipline. It also reported on one examiner who sexted a female colleague, and another examiner who visiting brothels
with colleagues during work trips.
The Journal reported that many female bank examiners quit
as a result of such experiences.
Gruenberg was also accused of having a volatile temper, and the report stated that FDIC staff "felt
disrespected, disparaged, and treated unfairly."
After a U.S. Senate Finance Committee hearing with Gruenberg
last week, its chair, Sen. Sherrod Brown (D-Ohio), said that he no longer believed that Gruenberg
could put an end to a culture of sexual harassment and discrimination at the
agency. He called for President Joe Biden to nominate a successor and for the
Senate to quickly confirm that person, the Times reported.
“There must be fundamental changes at the FDIC,” said Brown.
“Those changes begin with new leadership, who must fix the agency’s toxic
culture and put the women and men who work there—and their mission—first.”
On May 20, Gruenberg emailed employees saying he
was willing to step aside.
“In light of recent events, I am prepared to step down from
my responsibilities once a successor is confirmed,” Gruenberg wrote to
employees, the Times reported. “Until that time, I will continue to fulfill my
responsibilities as chairman of the FDIC, including the transformation of the FDIC’s
workplace culture.”
“The president will soon put forward a new nominee for FDIC
chair who is committed to those values and to protecting consumers and ensuring
the stability of our financial system, and we expect the Senate to confirm the
nominee quickly,” said Sam Michel, a White House deputy press secretary, in a
statement emailed to the Times.
Members of the special committee that the FDIC
formed to oversee the probe said on May 21 that they were deeply troubled by the
findings.
Linda Miller, CEO of the
consulting firm Audient Group and a nonvoting member of the special committee
formed by the FDIC to oversee the Cleary Gottlieb investigation, told the
Journal that the accountability recommendations in the report didn’t go far
enough to address the problem. She called for the FDIC to establish a mandatory
14-day suspension policy for staff who are credibly accused of sexual
harassment, among other measures.
Ninety-seven people reported 145 incidents of
sexual assaults, unwelcome sexual advances, unwanted touching and attention and
other sexual conduct, the report found. Ninety-one additional people reported
141 incidents of gender or sexuality-based discrimination, the Journal reported.
In addition, 187 people reported 320 incidents of bullying, threats and other verbal
abuse, and 191 people reported 295 incidents of other discrimination, including racial.
The report also documented structural problems at
the FDIC; the agency lacks a policy on intimate relationships between
employees, including between supervisors and subordinates. As a result,
investigators said, the agency has a culture in which “pursuing romantic
relationships with colleagues, including subordinates, has not been viewed as
problematic.”
Among the recommendations in the report was the
appointment of an external “Transformation Monitor” to audit the FDIC’s work to
address its problems, the creation of a 360-degree review process for the
chairman and other senior leaders, improved training and improved disciplinary
processes and record-keeping, the Journal reported.