FDIC chief facing pressure to resign after scathing report

A damning report about the profligate work culture at the Federal Deposit Insurance Corporation (FDIC) confirms that years of sexual harassment that has plagued the agency has been uncovered, prompting top banking regulator Martin Gruenberg to facing pressure to resign.

Following an investigation by the law firm Cleary Gottlieb Steen & Hamilton, top Republicans on the House Finance Committee and at least one Democratic lawmaker have called for Gruenberg to resign.

The law firm has documented numerous instances of sexual harassment and a “pervasive fear” among FDIC employees of reporting bad behavior to superiors.

“The time has come for Chairman Gruenberg to step down,” House Financial Services Committee Chairman Patrick McHenry, RN.C., said in a statement Wednesday.

“This report confirms that the FDIC’s toxic workplace culture, starting at the top, has led to deep and widespread misconduct within the agency,” he said.

Rep. Bill Foster (D-Ill.), ranking member of the Financial Services Subcommittee on Financial Institutions, also called for Gruenberg’s resignation.

“I am appalled and deeply disturbed by the details of the extensive sexual harassment and discrimination at the FDIC outlined in the report released today,” he said in a statement.

“To fix the toxic work environment that has prevailed for too long, we need to make fundamental changes, and that starts with a change in leadership.”

Senate Banking Committee Ranking Member Tim Scott, R.S.C., first investigated Gruenberg in December following the Wall Street Journal investigation that sparked the Cleary Gottlieb investigation. He reiterated his request for his resignation.

“The findings of this report are inseparable from the Chairman’s actions, given his nearly 20 years of leadership at the FDIC,” he said.

Other Democratic leaders stopped short of saying Mr. Gruenberg must step down.

Senate Banking Committee Chairman Sherrod Brown (D-Ohio) said Gruenberg “needs to immediately work to bring about fundamental changes to the agency and its culture,” but the government He did not call for new leadership for the agency.

Sexual harassment has been a known problem at the FDIC for years.

In 2020, the FDIC’s inspector general released a report showing sexual harassment at the agency a decade ago was almost as common as it is today.

In a 2019 survey conducted by the FDIC, approximately 8% of respondents said they had experienced sexual harassment, and 9% reported sexual harassment between 2014 and 2016.

Cleary Gottlieb’s latest report found that more than 500 of its 5,280 full-time workers, or about 9 percent, reported sexual harassment.

“Obviously the problem is [at the FDIC] “Problems have been festering over the years over the tenure of many committee chairs,” former Senate Finance Committee economist Aaron Klein wrote on social media on Tuesday.

“I think the nature of Washington is that the brunt of it goes to those who were in the seats when it happened, and people should understand the timing of many of these incidents.”

The FDIC announced an action plan in December aimed at fixing the agency’s culture following a Wall Street Journal investigation.

In a memo to FDIC employees on Tuesday, Gruenberg said the action plan would improve “accountability for those found to have engaged in misconduct, including separation from the FDIC.” .

Mr. Gruenberg, who has served as FDIC chair since 2023, has been the agency’s top leader since joining the board in 2005. During his nearly 20 years with the agency, he has served in a variety of capacities, including FDIC Chair, Vice Chair, and Acting Chair.

Mr. Gruenberg’s current position and long tenure at the FDIC have made him the focus of outrage over the agency’s work culture.

“While we do not believe Chairman Gruenberg’s conduct is the root cause of sexual harassment or discrimination at the agency or the long-standing workplace culture problems identified in our investigation, we believe that many FDIC employees As stated in the story, we know that for Chairman Gruenberg, culture “starts at the top,” Cleary Gottlieb researchers wrote.

But some supporters of Gruenberg’s regulatory policies argue that the report by Cleary Gottlieb, who led the FDIC when the Inspector General’s (IG) report was released in 2020. It blames partisanship for failing to hold former FDIC Chair Jelena McWilliams more accountable.

“Former Republican Chairman McWilliams and his senior leadership team should have ended workplace misconduct starting in May 2020, when they received the draft IG report, and in 2020, when the IG report became final. It certainly could have been concluded by July, but that didn’t happen,” regulatory advocacy group Better Markets said in a news release Wednesday.

McWilliams, who was appointed by former President Trump to lead the agency at the time of the release of the inspector general’s report, did not respond to a message from The Hill left at his office.

Former FDIC Chair Sheila Baer, ​​appointed by former President George W. Bush, did not respond to email requests left with the Systemic Risk Council, an organization that lists her as a senior adviser. .