FDIC Chairman Questioned on Capitol Hill After Report Outlines Agency’s Toxic Workplace Culture

WASHINGTON – Federal Deposit Insurance Corp. Chairman Martin Gruenberg sat down for a second day of questioning Thursday on Capitol Hill, this time at the Senate Banking Committee, after a scathing report on the company’s toxic workplace culture. agency was released last week.

The hearing was called to address oversight of financial regulators, including the Office of the Comptroller and the Federal Reserve, but two days of testimony focused primarily on workplace culture at the FDIC and failures, according to the report, by Gruenberg to avoid hundreds of people. cases of harassment and discrimination against employees.

An independent review of the FDIC’s workplace culture released last week describes an environment that fostered “hostile, abusive, unprofessional or inappropriate conduct” and questions whether the agency’s president is capable of leading the agency through a cultural transformation.

The report released Tuesday by law firm Cleary Gottlieb Steen & Hamilton cites incidents of stalking, harassment, homophobia and other violations of labor regulations, based on more than 500 employee complaints.

The complaints included a woman who said she was stalked by a co-worker and continually harassed even after complaining about his behavior; a field office supervisor referring to gay men as “little girls”; and a field examiner who described receiving a photo of her private parts from a senior FDIC examiner.

The FDIC is one of several regulators of the banking system. The Great Depression-era agency is best known for managing the nation’s deposit insurance program, which insures Americans’ deposits of up to $250,000 in case their bank fails.

On Thursday, Republican lawmakers flatly called on Gruenberg, who is a Democrat, to resign after a similar grilling in the House Financial Services Committee on Wednesday. At Thursday’s hearing, Sen. Tim Scott (R-SC) detailed several stories from female FDIC workers who described extreme harassment and stalking by their coworkers, complaints that were dismissed by supervisors, according to the report.

“Marty — you heard me say this directly to you — you should resign,” Scott said. “Your employees don’t trust you. And this is not a unique incident. This spans more than a decade of his leadership at the FDIC.”

Gruenberg said in his statement that he takes “full responsibility for anyone who has experienced sexual harassment, discrimination, or other misconduct at the FDIC. Once again I want to apologize and express how deeply I am sorry.”

Democratic senators did not call for the agency’s chairman to resign, but they did ask Gruenberg to turn the agency around.

“Chairman Gruenberg, it is up to you to prove to the public and your employees that you are that leader and are capable of restoring trust in the FDIC,” said committee chairman Senator Sherrod Brown (D-OH).

Senator John Kennedy said he plans to introduce a bill that would extend the statute of limitations for FDIC employees to file lawsuits over abuses they suffered while working at the agency.

“Have you ever heard the expression ‘a fish rots from the head down?’” Kennedy (R-LA) asked Gruenberg, adding, “you won’t be able to clean up the FDIC because you’ll be too busy defending yourself in court.”

Gruenberg heard similar comments from Democrats and Republicans about resigning or making serious reforms on Wednesday when he appeared before the House Financial Services Committee.

“There is a trust deficit and his credibility has been undermined,” said Rep. Ayanna Pressley, D-Massachusetts, at Wednesday’s hearing.