IG to launch investigation into FDIC’s leadership climate, harassment allegations

The Federal Deposit Insurance Corporation is facing new scrutiny over allegations of hosting a toxic work environment and sexual harassment at the highest levels.

The agency’s office of inspector general and both House and Senate lawmakers are pushing FDIC leadership to address the issues that have come to light only recently.

“We plan to initiate a new evaluation project to assess the FDIC’s sexual harassment prevention program, which will examine the changes made since our 2020 report titled Preventing and Addressing Sexual Harassment and the current effectiveness of the program,” a spokesperson for the IG said in an email. “In addition, the OIG plans to initiate a special inquiry to report on the leadership climate at the FDIC with regard to all forms of harassment and inappropriate behavior. We will announce both projects and objectives on our website once planning is complete.”

Additionally, Sen. Joni Ernst (R-Iowa) today joined a growing number of lawmakers pushing for the resignation of Chairman Martin Gruenberg. She also is asking the FDIC to answer questions and provide records about its actions to settle harassment cases. Ernst wrote a letter today to FDIC leadership asking for a response by Dec. 13.

These and other actions come after a Wall Street Journal report in November alleging a workplace culture that “drove many female bank examiners to quit,” specifically based on the actions of Gruenberg. The Journal also reported Gruenberg and other leaders didn’t take high-level allegations of sexism, harassment and discrimination seriously enough, causing employees to leave for fear of continued harassment.

Along with Ernst’s letter, Sen. John Kennedy (R-La.) also wrote a letter on Nov. 16 calling for Gruenberg to resign and seeking additional details about the IG’s investigations into allegations of sexual harassment in 2018.

House Financial Services Committee leaders added their voices to the scrutiny with a Nov. 22 letter demanding Gruenberg recuse himself from any ongoing independent investigation of the allegations and to produce documents and witnesses for testimony for the committee’s new investigation.

The FDIC responded to the news of the allegations with the Board of Directors establishing of a special committee of the board to oversee an independent third–party review of the agency’s workplace culture.

“The FDIC board is committed to fostering an environment and culture that promotes a safe, fair, and inclusive workplace for all FDIC employees. The board supports taking all actions necessary to identify and address the root cause of the problem and to promote accountability,” the board said in a release on Nov. 21.

The board named directors Jonathan McKernan and Michael Hsu to be the co–chairmen of this special committee. McKernan and Hsu also may appoint three additional non-voting members of the committee, likely from outside of the agency, to “advise and promote a diversity of views” within the committee.

“The review will be fully independent and those conducting it will report directly and exclusively to the special committee,” the release stated.

The Journal also reported that Gruenberg sent a video message to the FDIC workforce on Nov. 17 apologizing and taking responsibility for the agency’s culture. The Journal says the chairman, who has been nominated for a second term by President Joe Biden, “would visit every region to hold all-staff meetings and urged anyone who had experienced harassment to come forward.”

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