WASHINGTON–A House hearing on oversight of the prudential regulators focused primarily on grilling the FDIC chairman for what has been called a “toxic” environment at the agency that has led scores of women to quit and which was the subject of a highly critical report.
As CUToday.info has reported, an independent investigation led to a 234-page report that confirmed an earlier Wall Street Journal report that had detailed pervasive sexual harassment, discrimination and bullying at the agency. Critics called the bank insurer and regulator a “sexualized boys club.”
The report was written by the law firm Cleary Gottlieb Steen & Hamilton and commissioned by the FDIC. It was the subject of much of the discussion at the hearing, which also included representatives of the Fed and the OCC. As CUToday.info reports separately, NCUA Chairman Todd Harper was absent from the hearing due to back surgery, but he did submit a statement.
‘Not Fit’
House Financial Services Chairman Patrick McHenry (R-NC) led off the criticism of FDIC Chair Martin Gruenberg, whom McHenry reminded has led the FDIC for 10 of the past 13 years, saying Gruenberg is “not fit” to lead the agency.
“We have to focus on the conduct of the FDIC chair and ensure that this very important agency returns to a safe and sound manner,” McHenry said, often citing the report for its findings.
‘Deeply Troubling’
The committee’s minority leader, Rep. Maxine Waters (D-CA) called the report “deeply troubling” but also sought to spread the blame around. Gruenberg is a Democrat and Waters said that under both Republican and Democratic chairs the FDIC has “not done its job properly.”
“All employees deserve a work environment where they feel safe and it is Chair Gruenberg’s responsibility to make sweeping changes promptly for the benefit of every FDIC worker,” Waters said.
‘Moral Authority’ Lacking
Rep. Andy Barr (R-KY) told Gruenberg he does not have the temperament or the “moral authority” needed to lead the FDIC, adding that if the kind of conduct that was discovered at the agency were discovered at one of the banks it regulators, the management would be fired.
‘Appalled by Findings’
Rep. Bill Foster (D-IL) said he was “appalled by the findings” of the report and the fact the FDIC is “plagued by a toxic culture.”
“As someone who's led successful organizations and teams, I know that an organization's culture starts at the top,” Foster said. “We need agency leaders who comprehend the problem and are committed to implementing and following through the meaningful reforms that will ensure our agencies can attract and retain dedicated staff.”
FDIC Chairman Responds
In response, during his prepared comments Gruenberg said he is “deeply committed to the FDIC and its mission” and that he does not dispute the findings in the Cleary Gottlieb review.
“As chairman I take full responsibility to anyone who has experienced sexual harassment, discrimination or other misconduct at the FDIC,” Gruenberg said. “I want to apologize and express how deeply sorry I am. I also acknowledge my own failures as chairman both in failing to recognize how my temperament impacted others and for not having identified the deeper cultural issues at the FDIC. I am personally committed to addressing these issues.”
Gruenberg told the committee the FDIC accepts the recommendations of the report and are incorporating them into its existing action plan.
Apology Asked For
Later, McHenry grilled Gruenberg over finding that FDIC staff were afraid to bring issues to Gruenberg’s attention out of fear of angering him and suggested that some bank failures occurred due to staff fears over bringing problems to his attention.
“Do you apologize?” asked McHenry.
“I certainly do,” answered Gruenberg.
As CUToday.info reported earlier, it is unlikely Gruenberg will be fired, as that would elevate a Republican to chair of the FDIC, at least temporarily.
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