WASHINGTON–A new report around a toxic, “sexualized boys’ club” culture at the FDIC was the subject of testy exchanges and statements about lewd behavior not typically heard in the Senate, leading one senator to ask, “What the hell is going on at the FDIC?”
As CUToday.info reports separately, the Wall Street Journal has published an extensive investigation that alleges a highly misogynistic environment at the bank regulator, especially among supervisors overseeing examiners who were traveling as part of examinations. CUToday.info has coverage of the specifics in a separate report.
Sen. John Kennedy (R-LA), who asked the “What the hell is going on?” question of Gruenberg, noted the chairman of the federal bank regulator has been on the FDIC board since 2005 (he has served previous stints as chairman and vice chairman) and asked if he had ever sexually harassed an employee?
When Gruenberg said no, Kennedy responded, “Apparently, you're the only one.”
List of Allegations is Read
Kennedy then followed by reading some of the allegations made in the Wall Street Journal report, including:
- That a female employee recalled her male colleagues saying women “needed to use sex to get ahead” and that it was just an “accepted part of the culture”
- One female examiner said she received a photo of a colleague's penis during lunch
- Another young female employee said a male FDIC supervisor said he wasn't having enough sex in his marriage, and he told the young woman, “Obviously, if I walked into this office and you were naked, I'd F you right here.”
Kennedy pressed Gruenberg over whether he read the 2020 FDIC Inspector General report that flagged many of the issues and a culture where people “were acting like they were in Animal House or Porky's Revenge.”
When Gruenberg said he had read the report, Kennedy asked, “Well, what did you do about it?”
Gruenberg responded that he was not chairman at the time and didn’t have responsibility, but that of the 15 recommendations made in the report, the FDIC had addressed all of them.
A Testy Exchange
When then asked if anyone else on the board had taken any action, Gruenberg said that as a “general matter that falls to the chairman…(Editor’s Note: Jelena McWilliams was chair at the time). I was a member of the board to the extent that we were consulted, but in this matter it's really a management obligation to those young women…”
Kennedy: So, it was somebody else's fault?
Gruenberg: If I may say, the board certainly has an oversight responsibility, but in the day-to-day management of the agency, with matters like this it's reasonable to expect the chairman to take…
Kennedy: When the banks last spring screwed up out in California, you blamed it on their boards…
Gruenberg: I think the report that was done on the failures found that the root cause of the issue was the management of the institution…The report found we shared responsibility as a supervisor…
Kennedy: I think you and your colleagues all had your head in a bag. This is no country for creepy old men. Here’s a newsflash for you—you had a 2020 report. You sat on the board and you didn't do anything.
‘Ousted a Woman’
Sen. Cynthia Lummis (R-WY) picked up where Kennedy left off, saying Gruenberg had helped to “oust” a woman (McWilliams) as chair of the FDIC before moving into the post himself.
She said the FDIC had taken no action with any of those against whom the allegations of toxic behavior have been made, saying instead the agency simply sent them to other federal agencies.
“The culture at the FDIC is disgusting,” Lummis said. “So. what reforms to civil service do you need to remove bad employees from positions of public trust instead of shuffling them to the Fed or the OCC and, further, what are you specifically going to do about this?”
Gruenberg responded by again listing the review taking place and the third party that has been retained to help oversee the investigation.
“Tell me why you haven't done anything since you became chair about this? Why did it take a Wall Street Journal article to publicly outed (the FDIC) for this disgusting work culture? Why, when you had the earlier report in your hands?” Lummis asked.
Gruenberg again pointed to the 15 recommendations made in the IG report and said it has “resolved those to the satisfaction of the IG.
‘Did Anything Change?”
“Did it change the culture?” asked Lummis. “I think it’s no. I think it probably didn't and I think candidly that's the underlying issue here. People were puking off of roofs and peeing in elevators or vice versa.”
Gruenberg answered by saying the FDIC is “looking at it.”
“You know, if that happened in my office I would be doing a lot more than looking at it,” said Lummis. “I mean, that's so far beyond the pale of what would be acceptable human behavior anywhere, let alone in what is supposed to be a respected federal agency, that just looking at it or having a third party come in and evaluate--that is bureaucratic mumbo jumbo for, ‘We're doing nothing and nothing is going to improve.’ You sure as heck better do something about this now.”
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