April 2, 2023, Federal Deposit Insurance Corporation (FDIC) Building in Washington, DC, USA.
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The Federal Deposit Insurance Corporation must make sweeping changes to address widespread sexual harassment and other misconduct, an independent report released Tuesday said, raising questions about the future of the banking regulator’s leadership.
The report, prompted by a Wall Street Journal investigation, cited more than 500 people, some of whom alleged bullying and abusive behavior by FDIC Chairman Martin Grunberg.
Overall, Report from Cleary Law FirmPaints a picture of sexual harassment, racial discrimination and bullying pervasive at every level of the agency, tolerated by senior leaders for years while complaints of misconduct were met with retaliation.
“For too many employees, the FDIC has long failed to provide a workplace free from sexual harassment, discrimination, and other interpersonal misconduct,” the report states, adding that those accused of misconduct are often rehabilitated. Assign new roles.
Cleary Gottlieb’s report found that officials responsible for addressing the issues uncovered by the Journal report were themselves the subject of misconduct allegations, underscoring the agency’s toxic culture.
The findings have reignited calls to oust Grunberg, a Democrat who has been the agency’s senior leader for nearly two decades.
Republican Rep. Patrick McHenry, chairman of the House Financial Services Committee, called for Grunberg to resign after the report was released, saying it made clear the agency needed new leadership.
“The FDIC needs to be fixed. The women and men who work there deserve better,” Senate Banking, Housing and Urban Affairs Committee Chairman Sherrod Brown said in a statement. “Chairman Grunberg must “Accountability must be taken and efforts must be made immediately to make fundamental changes to the institution and its culture.”
According to the report, some employees described Grunberg as “stern”, “aggressive” and prone to losing his temper. Grunberg said in interviews with investigators that he did not recall any wrongdoing. Some employees reported positive interactions with him and considered his personality to be more “prosecutive,” the report said.
In a statement to staff, Grunberg called the report “sobering” and vowed to implement its recommendations.
He said he was ultimately responsible for what happened at the agency and apologized for any shortcomings. “I want to express my apology again,” he added.
Leadership Cloud
The report recommended appointing new officials dedicated to changing the FDIC’s culture and hiring an independent third party to assist with the transition, but did not consider whether senior leaders should resign.
It also calls on the agency to establish an anonymous hotline to report misconduct and abuse, develop a more timely and transparent complaint-handling process and take steps to ensure victims are protected and supported.
While the report found that Grunberg’s aggressive behavior was not the root cause of the agency’s more serious problems, it raised doubts about his ability to oversee the major reforms needed.
“As the FDIC faces a crisis related to its workplace culture, Chairman Grunberg’s reputation raises questions about the credibility of leadership’s response to the crisis and the ‘moral authority’ to lead a cultural transformation,” the report states.
Grunberg was appointed by President Joe Biden in 2022, and his departure could jeopardize the administration’s efforts to impose stricter financial rules, including Pending regulatory proposals bank capital requirements, which prompted fierce opposition from Republicans and industry representatives.
A White House spokesman did not respond to a request for comment.
If Grunberg resigns or is fired, the agency’s charter stipulates that FDIC Vice Chairman Travis Hill, a Republican, will take over and the agency’s board of directors will be composed of Republicans and Democrats Evenly divided.
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