Strip Clubs, Lewd Photos and a Boozy Hotel: The Toxic Atmosphere at Bank Regulator FDIC

Employees say sexual harassment, misogyny pervade federal agency tasked with ensuring stability of nation’s banks, driving women to leave

By Rebecca Ballhaus of The WSJ. Excerpts:

"A toxic work environment at the FDIC, one of the nation’s top banking regulators, has for years caused employees to flee from an agency they say enabled and failed to punish bad behavior, according to a Wall Street Journal investigation"

"the FDIC continues to show a hesitance to impose harsh discipline on managers accused of misconduct"

"Female examiners left the FDIC because of what they say was a sexualized, boys’ club environment and the belief they were consistently given fewer opportunities than their male counterparts, according to interviews with more than 100 current and former employees, including more than 20 women who quit. 

While traveling to banks across the country, where regulators are meant to evaluate banks’ financial stability and compliance with regulations, male examiners talked openly about female colleagues’ appearances. A former female employee recalled her male colleagues saying women needed to use sex to get ahead at the FDIC, as they stared at her.

The agency tolerated a heavy drinking culture. The FDIC’s 11-story hotel outside Washington, where out-of-town employees stay when attending training, was a party hub, where people have vomited in the elevator and urinated off the roof after nights of heavy drinking."

"In 2020, the agency’s inspector general found the FDIC’s policies for preventing, identifying and disciplining sexual harassment fell short. It called the agency’s tracking of misconduct allegations “decentralized, untimely, incomplete, and inaccurate.” It said the agency wasn’t able to identify all the allegations of sexual misconduct employees had made and was unable to track patterns of harassment by individuals or in certain offices."

"Reports of the agency’s problems stretch back more than a decade and have persisted through changes in leadership, administrations and internal investigations."

"Many employees didn’t file complaints about their harassment, fearing retaliation or believing nothing would come of it. When people did complain, the FDIC in multiple instances investigated and substantiated complaints but moved the perpetrators to other offices instead of firing them, which for federal employees can be a difficult process."

"The agency has been under renewed scrutiny following the major failures this spring of

Signature Bank

,

First Republic Bank

and Silicon Valley Bank. An internal review cited the FDIC’s struggles to retain examiners as part of the reason it didn’t detect problems with some of the failed banks earlier."

"Trainees receive frequent performance ratings from the employee leading each exam, which affect the kinds of assignments they receive going forward. Current and former employees said that system intensified the pressure to be part of the in crowd and made them even more reluctant to file complaints, fearing their reviews would drop if they were labeled as difficult."

"Resignations of examiners-in-training more than doubled in 2021 to 54 from 24 the previous year, and rose to 62 in the first nine months of 2022, the FDIC’s IG said in a February report, without citing any causes. The agency hires fewer than 200 trainees every year. Only 48% of the class of examiners hired in 2017 remain at the agency, according to numbers provided by the FDIC."

"The agency, however, has highlighted its struggle to attract and retain female examiners in every annual diversity report since 2011."

"The agency’s IG report in 2020 cited a survey the IG conducted in 2019 that found 8% of more than 2,300 respondents said they had been sexually harassed. Some 38% of those harassed said they didn’t report the incidents for fear of retaliation. The FDIC received 12 allegations of sexual harassment from 2015 to 2019, the report said."

"In 2021, a survey by the MSPB arbitration panel found that 18% of female FDIC employees reported having experienced some form of sexual harassment in the previous two years, four points higher than in its previous survey in 2016."