Yahoo Finance FDIC Investigation Finds Credible Allegations of Toxic Workplace
(Bloomberg) -- Federal Deposit Insurance Corp. staff have for years suffered through a toxic culture that fails to keep many of them safe from sexual harassment or discrimination, according to a review of the bank regulator’s workplace.
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The findings released Tuesday reflect reports from more than 500 people who detailed “sexual harassment, discrimination and other interpersonal misconduct” at the FDIC. The law firm Cleary Gottlieb Steen & Hamilton was tapped by the agency in December to investigate after the Wall Street Journal reported that female bank examiners had left the FDIC because of its “sexualized, boys’ club environment.”
The document paints a grim picture of an agency where complaints about misconduct often aren’t dealt with properly and harassment has been tolerated. Although the probe was prompted by the Journal article, hundreds of employees have called a secure hotline in the past several months to recount their own experiences of workplace misconduct. Some of the allegations occurred in recent weeks, according to the 200-plus-page report.
The workplace issues are adding to the political pressure on FDIC Chairman Martin Gruenberg, who already faced opposition from congressional Republicans over a plan by his agency, the Federal Reserve and the Office of the Comptroller of the Currency to require banks to hold more capital. The report didn’t conclude that Gruenberg failed to act on the allegations reported by the Journal, but questioned whether he is the best person to lead the workplace culture changes at the agency.
The law firm’s investigators recommended changes to the agency’s performance review process, workplace conduct metrics, and that an internal monitor be installed to oversee the effort. “To fully and effectively address this conduct and these conditions, we believe cultural and structural change is necessary,” the report said.
Harassment Allegations
The findings include detailed and sometimes graphic allegations of sexual harassment and discrimination. The allegations came through the hotline, interviews and a review of the FDIC’s records.
One employee reported that a supervisor, speaking about the difficulty he and his wife were having conceiving, said he knew he couldn’t “technically” ask the female employee to be a surrogate “since I’m your boss.” In another instance, women in one FDIC field office were subjected to their boss talking about their breasts and legs and his sex life.
Other employees reported managers who frequented brothels, massage parlors and strip clubs, sometimes pressuring subordinates to join them. Managers were notorious in certain field offices as “womanizers,” and their reputations were spread via word of mouth as warnings to other women, the report said. Employees also recounted homophobic statements made by their supervisor in one field office.
Multiple employees from underrepresented groups were also told by colleagues they were only hired to fill a quota, the report said. In another instance, a Hispanic employee reported being asked to say the Pledge of Allegiance to prove American citizenship.
The report said that some FDIC executives taking part in the agency’s plan to address the workplace misconduct have themselves been involved in problematic behavior. An employee who came forward to investigators likened the situation to “foxes guarding the hen house.”
‘Sobering Look’
In a statement to agency staff, Gruenberg said Tuesday that the findings present a “sobering look inside our workplace” and include details from hundreds of workers about “painful experiences of mistreatment and feelings of fear, anger and sadness.”
“We will spare no effort to create a workplace where every employee feels safe, valued and respected,” said Gruenberg, adding that the agency was implementing a plan to follow the report’s recommendations.
The law firm’s report wasn’t intended to recommend discipline or call for the removal of agency officials, according to people familiar with the review. Gruenberg was interviewed as part of the process.
After the report’s release, Patrick McHenry, a North Carolina Republican who chairs the House Financial Services Committee, called for Gruenberg to resign. Tim Scott, the highest ranking Republican on the Senate Banking Committee, also said the FDIC chief should step down.
Gruenberg Apology
The law firm’s review also cited examples of Gruenberg losing his temper with staff in instances unrelated to the Journal’s allegations and questioned whether he was the best person to lead the workplace culture changes.
“While we do not find Chairman Gruenberg’s conduct to be a root cause of the sexual harassment and discrimination in the agency or the long-standing workplace culture issues identified in our review, we do recognize that, as a number of FDIC employees put it in talking about Chairman Gruenberg, culture starts at the top,” the report said.
In his statement, Gruenberg apologized to staff for any shortcomings on his part.
“To anyone who experienced sexual harassment or other misconduct at the FDIC, I again want to express how very sorry I am,” Gruenberg said. “As chairman, I am ultimately responsible for everything that happens at our agency, including our workplace culture.”
Asked about the situation, White House Press Secretary Karine Jean-Pierre said that Gruenberg had addressed the findings.
“He apologized and has committed to the recommendations that have been provided by the independent report and going to further fix the longstanding issues, obviously, that are in the report,” she said.
(Updates with report details starting in fourth paragraph.)
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