FDIC Special Review Committee Releases Scathing Independent Report on Workplace Misconduct and Culture

May 14, 2024Federal Regulation, News

Last week, the FDIC released the report from the independent third-party review, led by the law firm Cleary Gottlieb Steen & Hamilton LLP, into allegations of sexual harassment and other misconduct at the regulatory agency, as well as to the FDIC management’s response to those allegations.

According to a press release accompanying the report, “the independent review found that, for far too many employees and for far too long, the FDIC has failed to provide a workplace safe from sexual harassment, discrimination, and other interpersonal misconduct. It further found that management’s responses to allegations of misconduct, as well as the culture and conditions that gave rise to them, have been insufficient and ineffective.”

“Today’s report establishes the urgent imperative of a culture transformation at the FDIC led by those with the leadership capacity to effectuate that change,” said Special Committee co-chair Jonathan McKernan. “The report marks an important first step towards healing, repair, and sustainable change at the FDIC. Fostering an environment that promotes a safe, respectful, and inclusive workplace is fundamental to achieving the agency’s mission.”

In response to the report, some in Congress—mostly Republicans—have called to FDIC Chair Martin Gruenberg to resign.

“It’s time for Chair Gruenberg to step aside,” said House Financial Services Committee Chairman Patrick McHenry (R-N.C.) in a press release. “The independent report released today details his inexcusable behavior and makes clear new leadership is needed at the FDIC.”

“The FDIC must be held to the same standards of conduct it imposes on the entities it regulates,” McHenry continued.

Similarly, Senate Banking Committee Ranking Member Tim Scott (R-S.C.) said, “It’s clear that the FDIC, its mission, and most importantly, its employees, have all suffered under Chairman Gruenberg’s leadership – this report underscores that fact. It’s time for Chairman Gruenberg to resign so the FDIC can move forward with the leadership it deserves and desperately needs to ensure employees and the important work of this agency are supported.”

But Democratic leaders have largely stopped short of calling for Gruenberg to resign. Senator Sherrod Brown (D-Ohio), for example, who chairs the Senate Banking Committee, said, “the FDIC needs to be fixed. The women and men who work there deserve better. Chair Gruenberg must accept responsibility and must immediately work to make fundamental changes to the agency and its culture.”

And Rep. Maxine Waters (D-Calif.), Ranking Member on the House Financial Services Committee, said “Chair Gruenberg and the FDIC Board must promptly implement policies and programs that ensure there is a professional environment where everyone feels safe and protected.”

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