FDIC Investigation Finds Culture Rife With Sexual Harassment, Discrimination

Law-firm report indicates Chairman Gruenberg has anger issues, questions ability to overhaul culture

By Rebecca Ballhaus and Andrew Ackerman of The WSJ. Excerpts:

"Sexual harassment, bullying and discrimination have long pervaded the Federal Deposit Insurance Corp., with perpetrators often receiving reassignments and even promotions, according to a blistering report on the agency’s culture that calls into question the leadership of Chairman Martin Gruenberg."

"The 234-page report includes examples of brazen misconduct. Executives who were known for pursuing and having relationships with subordinates were promoted or moved to other regions or divisions rather than facing discipline. One senior FDIC examiner sent a woman a picture of his private parts, while another was known for going to brothels with colleagues during work trips. A Hispanic employee was asked by a colleague to recite the Pledge of Allegiance to “prove that they were American.”"

"many female bank examiners quit as a result of such experiences."

"multiple employees, including senior leaders, have experienced “extremely difficult and volatile” interactions with Gruenberg, a Democrat who has spent nearly two decades at the FDIC. FDIC employees, including senior leaders, felt “disrespected, disparaged and treated unfairly” by Gruenberg, and said the chairman was perceived as “someone who was angry and upset and who could not control his temper.”"

"Gruenberg had repeatedly berated staffers, he said he had been generally unaware of allegations of a toxic culture and resisted calls from Republican lawmakers to resign."

"Gruenberg’s long tenure and reputation for losing his temper with staff “presents unique challenges” for him to lead the cultural and structural overhaul that it said is needed and questioned whether he has the “moral authority” to do so."

"As a presidential nominee, he can only be pushed out by the president."

"White House press secretary Karine Jean-Pierre didn’t directly answer when asked at a briefing if Biden still had confidence in Gruenberg. But she noted that the FDIC chief had “apologized and has committed to the recommendations” in Tuesday’s report."

"Problems with the agency’s culture have been raised internally, including to senior leadership, but their responses have been insufficient"

"Investigators described the agency’s culture as “patriarchal, insular and risk-averse.” 

Widespread fear of retaliation and a “lack of clarity and credibility around internal reporting channels” have driven an underreporting of misconduct over the years, the report said. 

One employee who reported an incident in which a female examiner was described as “like a grizzly bear with tits” was relocated after doing so, while the employee whose conduct he described stayed put. 

Some 97 people reported 145 incidents of sexual assaults, unwelcome sexual advances, unwanted touching and attention and other sexual conduct. 

Ninety-one additional people reported 141 incidents of gender or sexuality-based discrimination. Some 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 documented structural problems at the FDIC.

For one, the FDIC doesn’t have 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.”

A former field office supervisor pursued and had relationships with junior staffers, including student interns. When he was reported to the regional office for having a relationship with an intern, he wasn’t disciplined. While on a work trip, a former executive was thrown out of a strip club for inappropriately touching dancers and subsequently asked an employee during a cab ride, “Does your husband eat you?” (She never reported it because she didn’t know who to tell and didn’t think anyone would believe her.) Another executive asked an employee how far away she lived and suggested they could “get there and back before the end of the day.”"

"Of the 92 harassment complaints the agency received between 2015 and 2023, none resulted in a removal, demotion or pay cut. Of those, 76 led to no discipline at all. In 12, the perpetrators received counseling, warnings or training; in two, they were suspended; and in another two they received letters of reprimand."