FDIC investigation finds credible claims of toxic workplaces

(Bloomberg) — An investigation into the Federal Deposit Insurance Corp. workplace. found credible allegations of a toxic environment for bank examiners and that the agency’s culture needs an overhaul, according to four people with direct knowledge of the findings.

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The report by law firm Cleary Gottlieb Steen & Hamilton said the FDIC needs a “structural and cultural change” to restore trust in its ranks and across the agency, three of the people who spoke on condition of anonymity said discussed an unpublished review. It runs more than 200 pages and contains reports of problematic behavior by FDIC employees.

The findings also recommend changes to the agency’s performance review process and workplace behavioral metrics, as well as installing an internal monitor to oversee the efforts, the people said. The investigation was sparked by an article in the Wall Street Journal in November that said female bank examiners had left the FDIC because of its “sexualized boys’ club environment.”

The review found the article’s description of workplace culture to be credible, the people said. The results also showed that employee satisfaction scores have declined in recent years due to cultural issues, they added.

“Sobering look”

In a statement to agency employees obtained by Bloomberg News, FDIC Chairman Martin Gruenberg said Tuesday that the findings provide a “sobering look into our workplace” and provide details from hundreds of workers about “painful experiences of mistreatment and feelings of fear , anger, etc. contain sadness.”

“We will spare no effort to create a workplace where every employee feels safe, valued and respected,” Gruenberg said, adding that the agency is implementing a plan to follow the report’s recommendations. He said the report would be released later on Tuesday.

The Journal article sparked calls from some prominent Republican lawmakers for Gruenberg, who was appointed by President Joe Biden, to resign. At the time, Sherrod Brown, an Ohio Democrat who chairs the Senate Banking Committee, called for an investigation by the agency’s inspector general.

Read more: FDIC fails meeting on bank fees as pressure mounts on chairman

The FDIC’s jobs woes add to the political pressure Gruenberg faces from Wall Street and some lawmakers over a plan by his agency, the Federal Reserve and the Office of the Comptroller of the Currency, to demand more capital from banks.

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Gruenberg apology

The scope of the law firm’s investigation was not intended to recommend disciplinary action or call for the firing of agency officials, the people familiar with the findings said. Gruenberg was interviewed as part of the review.

The investigation did not conclude that Gruenberg failed to respond to the allegations reported by the Journal, the people said. However, examples are cited of him losing his temper with employees in other instances, raising questions about whether he is the best person to lead workplace culture changes at the agency, they added.

In his statement, Grünberg apologized to employees for “any omissions on my part.”

“To everyone who has experienced sexual harassment or other misconduct at the FDIC, I would like to reiterate how deeply sorry I am,” Gruenberg said. “As CEO, I am ultimately responsible for everything that happens at our agency, including our workplace culture.”

(Updates with FDIC Chair comment beginning in fifth paragraph.)

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