WASHINGTON–Six months after accusations of a toxic, “sexualized boys club” at the FDIC, the agency has released a report from the independent third-party review that confirms the allegations of sexual harassment and other interpersonal misconduct. The FDIC’s long-time chairman, on whom the report places much of the responsibility for what has happened at the agency, has also issued an apology.
The report said the culture of sexual harassment, discrimination and abuse had been tolerated for years.
As CUToday.info reported, the Wall Street Journal ran an extensive report in late 2023 that found the FDIC had for decades tolerated a “sexualized boys club” environment, with allegations workers have acted abusively against women, including supervisors inviting female employees to strip clubs, another supervisor requesting sex with an employee, and employees being urged to drink whiskey while working. Dozens of women reportedly quit the agency as a result.
‘Far Too Long’
The independent third-party review was conducted by Cleary Gottlieb and overseen by the Special Committee of the FDIC board.
“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,” according to the agency. “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.”
More than 500 FDIC current and former employees were interviewed by Cleary Gottlieb as part of the review.
Responsibility Placed on Chair
The report places responsibility for the misconduct and culture with the office of the its chairman, Martin Gruenberg, who has been with the FDIC since 2005 and has previously served as both chairman and vice chairman. The report, however, makes no recommendation relative to Gruenberg or anyone else in management, indicating that would be up to the administration or Congress.
The report notes Gruenberg has been in a leadership position at the agency for 20 years – including as board chairman for 10 of the last 13 years – and stated that leading cultural transformation at an agency that he has led for so long “presents unique challenges for Chairman Gruenberg, as do the incidents of – and resulting reputation for – losing his temper and expressing anger with staff.”
Recommendations Made
The report also:
- Calls for a “genuine and sustained commitment to lead a culture change, accompanied by a recognition and acknowledgement that such change is necessary because of failings of the past,” including that of its chairman.
- Recommends as one of the steps to protect the victims of misconduct, the appointment of a culture and structure transformation monitor, the retention of a third-party expert to assist and advise in implementation, structural changes in the investigations function, an independently run hotline, and new and revised policies and trainings.
‘Urgent Imperative’
“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,” Special Committee co-chair Jonathan McKernan said in a statement. “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.”
The Priorities
In a statement, the Special Committee said it prioritized the credibility, effectiveness, and independence of the review process.
To promote a diversity of views, the Special Committee said appointed three non-voting members to join the committee, who brought a “wealth of banking, regulatory, executive, and leadership experience that greatly assisted the committee.”
Cleary Gottlieb said in a statement it was asked to conduct a review of allegations of sexual harassment and other interpersonal misconduct at the FDIC and management’s response to such harassment and misconduct, as well as the FDIC’s workplace culture. It said it was “not asked, nor did it assess, whether particular individuals within the FDIC, such as the Chairman, should be removed or otherwise disciplined for alleged misconduct. Any decisions on that subject can only be by those who have the requisite authority and following the appropriate process.”
Apology from Chairman
In a statement released with the report, Chairman Gruenberg said, “…This report presents a sobering look inside our workplace. Hundreds of our colleagues reported painful experiences of mistreatment and feelings of fear, anger, and sadness. Many also expressed a sense of hope that we can achieve positive change for the future. I accept the findings and recommendations of this report and thank the Special Review Committee for their exhaustive work.
“I want to also thank everyone who shared their experiences throughout this process. I know that doing so was difficult. To anyone who experienced sexual harassment or other misconduct at the FDIC, I again want to express how very sorry I am. I also want to apologize for any shortcomings on my part. As Chairman, I am ultimately responsible for everything that happens at our agency, including our workplace culture.
A ’Personal Pledge’
“I personally pledge to each of you that we will implement the recommendations contained in this report. As you know, the detailed Action Plan we released last December begins to address many of the issues outlined in the report—providing more support to victims, in-person training for all FDIC employees, strengthening procedures for reporting, and improving accountability for anyone who is found to engage in misconduct, including separation from the agency. In many instances, our Action Plan goes beyond the recommendations in the report. We will spare no effort to create a workplace where every employee feels safe, valued, and respected.
“Making meaningful and sustained change to our workplace culture will not be easy. It will require us to demonstrate each and every day our commitment to embody our core values, including fairness and accountability. I believe that we can and we will rise to this challenge, as we have so many others over the past 90 years.”
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