FDIC Under Fire After Report of Sexual Harassment, Other Misconduct

The Wall Street Journal recently published an explosive report highlighting the “toxic atmosphere” described by current and former employees of the Federal Deposit Insurance Corp., including 20 women who quit the agency. The interviews revealed more than a decade of incidents, including unwanted sexual advances and pressure to excessively drink.

FDIC Chair Martin Gruenberg told lawmakers that he was “personally disturbed and deeply troubled” by the report because he wasn’t “generally aware” of the allegations. He ordered an evaluation be done by attorneys from the law firm BakerHostetler within the next 90 days. An FDIC spokesperson also confirmed that the agency hired a third-party firm to perform an audit.

Travis Hill, FDIC Vice Chairman, and Jonathan McKernan, a member of the FDIC’s board of directors—both Republicans—released a joint statement urging the evaluation “be effectively overseen by the Board and have the latitude and time needed to conduct a thorough, holistic review.” The FDIC Board has established a Special Review Committee to direct and oversee the investigation. Gruenberg said he would play no role in overseeing the review.

Republicans on the House Financial Services Committee sent a letter to Gruenberg to inform him that they would be opening its own investigation into the FDIC. The committee will investigate Gruenberg’s personal conduct and the work environment’s potential role in recent bank failures.

“By ignoring or choosing to remain silent about workplace misconduct at the FDIC, your leadership may have contributed to the financial instability and threats to financial security of Americans that were observed in March,” the lawmakers wrote.

Additionally, Senator Sherrod Brown (D-Ohio) and other Democratic Senators on the Senate Banking Committee called for an independent investigation of the FDIC to ensure that the agency addresses the allegations and restores public trust.

“The FDIC’s employees play a critical role in ensuring our financial system operates in a safe and sound manner,” they wrote. “It is imperative that the FDIC recruit and retain talented public servants and create a safe and professional work environment.”