Cleaning Up The Mess: The Toxic Culture At The FDIC Brings Chair To His Knees...

By Victor Smiroff | Wednesday, 08 May 2024 11:59 PM
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Image Credit : Photo by Gruenberg Martin, The Hill

The Federal Deposit Insurance Corporation (FDIC) Chair, Martin Gruenberg, has issued an apology to his staff following an investigation that confirmed allegations of widespread sexual misconduct, inappropriate behavior, and retaliatory administrative practices within the federal banking regulator.

In a statement, Gruenberg said, “To anyone who experienced sexual harassment or other misconduct at the FDIC, I again want to express how very sorry I am. I also want to apologize for any shortcomings on my part.” He described the investigation's findings, conducted by law firm Cleary Gottlieb Steen & Hamilton, as a “sobering look” into the FDIC's internal culture.

The investigation was initiated in response to a damning report by the Wall Street Journal, which portrayed the FDIC as a male-dominated environment rife with sexual harassment and misogynistic behavior. The law firm's report, which is expected to be made public on Tuesday afternoon, confirmed these allegations.

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Gruenberg, who has served the agency for nearly two decades, did not indicate any plans to resign despite calls from Republican lawmakers on the Senate Banking Committee for him to step down. In his statement, he pledged to implement the report’s recommendations, stating, “Hundreds of our colleagues reported painful experiences of mistreatment and feelings of fear, anger, and sadness.”

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According to Reuters, the Cleary Gottlieb investigation found that over 500 FDIC employees reported instances of misconduct. The law firm also uncovered numerous cases of bureaucratic retaliation against employees who reported their supervisors for inappropriate behavior.

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The confirmation of the Wall Street Journal's allegations by the legal investigation is likely to increase pressure for significant changes within the FDIC. Gruenberg acknowledged this in his statement, noting that “Making meaningful and sustained change to our workplace culture will not be easy.”

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The investigation's findings may also reignite calls for Gruenberg's resignation. In December, Sen. Tim Scott (S.C.), the top Republican on the Banking panel, wrote, “Given the importance of the role of the FDIC in maintaining stability and public confidence in the nation’s financial system, we call on you to step down as Chairman and Board Member and allow someone with more credibility to address the hostile workplace culture at the FDIC to which you have contributed.”

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