The Federal Deposit Insurance Commission (FDIC) is rife with “long-standing and deeply ingrained” workplace culture problems and misconduct, according to an independent investigation published Tuesday.
The federal agency was found to have a “good ol’ boys” club culture “where favoritism is common, wagons are circled around managers, and senior executives with well-known reputations for pursuing romantic relations with subordinates enjoy long careers without any apparent consequence,” the report, carried out by New York-based law firm Cleary Gottlieb Steen & Hamilton, wrote.
The investigation was commissioned by the FDIC last year following a Wall Street Journal report that detailed a pervasive toxic atmosphere at the agency. The law firm spoke with 500 FDIC employees out of nearly 6,000. The FDIC is tasked with maintaining stability and public confidence in the U.S. banking system.
While some staffers said reports of misconduct were “outdated,” and others were even surprised by the allegations, many more said that there was a “toxic culture,” and described it using words like “misogynistic,” “patriarchal,” “insular,” according to the report.
Others said the impact of the so-called “good ol’ boys network” was that it kept in place groups that were “set in their ways,” “old-school,” “stubborn” “leer[y]” of outsiders, and generally resistant to change.
One executive told investigators that the FDIC’s policy towards interpersonal misconduct is “pay, promote, or move” employees involved. Many also said that complaints about issues of workplace culture often “fall on deaf ears” and that there is a general fear of retaliation if concerns are raised.
Culture ‘starts at the top’
The report also touched on allegations made against FDIC chair Martin Gruenberg, whose explosive temper was previously reported on by the Journal. The investigation found that some employees reported having “deeply unsettling exchanges” with Gruenberg, in which he was “extremely ‘harsh,’ ‘aggressive,’ and ‘upset.’”
These behaviors became especially pronounced when staffers had to deliver news that they feared would upset Gruenberg, with his reactions having a “chilling” impact on open communications, according to the report.
“While we do not find Chairman Gruenberg’s conduct to be a root cause of the sexual harassment and discrimination in the agency or the long-standing workplace culture issues identified in our review, we do recognize that, as a number of FDIC employees put it in talking about Chairman Gruenberg, culture ‘starts at the top,’” the report’s authors wrote.
They questioned the credibility of the agency’s leadership to respond to the “crisis,” and whether it has the “moral authority” to lead a cultural transformation, given Gruenberg’s reputation. Gruenberg took on the role last January, and has been a member of the FDIC Board since August 2005. He served another stint as chairman from November 2012 to mid-2018, and as acting chair on several occasions.
Several members of Congress, including House Financial Services Committee chairman Patrick McHenry, called on Gruenberg to resign from his post on Tuesday as a result of the report’s findings. “It’s time for Chair Gruenberg to step aside. The independent report released today details his inexcusable behavior and makes clear new leadership is needed at the FDIC,” McHenry said in a statement.