FDIC Has Toxic Work Culture and Leadership, Independent Report Finds

May 8, 2024 Vaseline stjohnson 0

A major US banking regulator has a “patriarchal” and “insular” culture and is led by a chairman with a reputation for having a strong temper, according to an independent report released Tuesday.

The 234-page summary of the months-long investigation, led by outside law firm Cleary Gottlieb Steen & Hamilton, highlighted recent and long-standing problems at the Federal Deposit Insurance Corporation (FDIC). The report says the FDIC has dismissed countless harassment complaints and that bad actors are transferred internally or promoted.

The law firm’s report builds on a damning story published in November in The Wall Street Journal about the FDIC’s toxic work culture and comes as the FDIC faces a House investigation.

Investigators said they set up a hotline in mid-January and received more than 500 complaints — largely from current employees — about sexual harassment, discrimination and other issues. The FDIC has about 6,000 employees.

Tuesday’s report characterized the FDIC’s culture as “‘misogynistic,’ ‘patriarchal,’ ‘insular,’ and ‘outdated’: a ‘good ol’ boys’ club where favoritism is common, bandwagons circle around managers and top executives. with good grades. Reputations known for maintaining romantic relationships with subordinates enjoy long careers without any apparent consequences.”

While the FDIC operates an anti-harassment program, the report says it is ineffective. Of the 92 complaints the FDIC received between 2015 and 2023, none resulted in discipline more serious than a suspension, and only two warranted suspensions, while 78 did not result in any discipline. Investigators said many employees did not report problems because they feared retaliation.

Investigators spoke with an employee who said she “deeply feared for her physical safety” after her colleague, who was harassing her, continued to send her sexually explicit text messages, even after she filed a complaint against him. Staff from underrepresented groups said they were told they were “token” employees meant to cover quotas.

Tuesday’s investigation builds on a 2020 report by the FDIC inspector general that found the regulator had not created an “adequate” sexual harassment prevention and reporting program. The previous report also noted widespread fear of retaliation.

Independent investigators spent nine pages analyzing the conduct of FDIC Chairman Martin Gruenberg. Investigators wrote that they heard “credible reports” about Gruenberg’s temperament, including in meetings as recent as May 2023.

“As the FDIC faces a crisis related to its work culture, Chairman Gruenberg’s reputation raises questions about the credibility of the leadership’s response to the crisis and the ‘moral authority’ to lead a cultural transformation,” the report says.

Gruenberg said in a statement to employees made public Tuesday that he took responsibility for the agency, including its culture. The 71-year-old Democrat has spent nearly a decade in office under multiple presidential administrations.

“I also want to apologize for any shortcomings on my part,” he said.

After the report was released, some lawmakers from both parties called for Gruenberg’s ouster. His departure would place Vice President Travis Hill, a Republican, in the interim position.

On Tuesday, White House press secretary Karine Jean-Pierre did not say whether the president still has confidence in Gruenberg.

He said Gruenberg “apologized and committed to the recommendations” of the law firm.

The FDIC did not immediately respond to a request for comment from Business Insider. sent outside of normal hours. The agency has not issued any statement beyond Gruenberg’s Tuesday message to employees.