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FDIC investigation shows culture is rife with sexual harassment and discrimination

Sexual harassment, bullying and discrimination are common law at the Federal Deposit Insurance Corp. has long been pervasive, and perpetrators often receive reassignments and even promotions, according to a blistering report on the agency’s culture that questions the leadership of Chairman Martin Gruenberg.

The report, prepared by law firm Cleary Gottlieb Steen & Hamilton and described by people familiar with the matter, was commissioned by the banking regulator after a Wall Street Journal investigation in November uncovered a toxic work culture at the agency. The FDIC is expected to release it later today.

More than 500 of the agency’s fewer than 6,000 employees, most of them current, subsequently contacted the law firm to share their experiences with misconduct at the agency.

These include women being exposed to nude photos of senior bank examiners and male supervisors visiting strip clubs and making lewd comments to female colleagues, prompting many to quit, the Journal reported.

The review also found instances of verbally abusive behavior by Gruenberg, who worked at the FDIC for nearly two decades. The report found that FDIC employees, including senior executives, had felt disrespected and mistreated by Gruenberg and that the chairman was perceived to be unable to control his temper.

After the Journal’s investigation was published, Gruenberg, a Democrat, said he was generally unaware of allegations of a toxic culture and had resisted calls from Republican lawmakers to resign.

The report is not expected to make a recommendation on whether Gruenberg and other senior executives should face disciplinary action or removal, which was outside the scope of investigators. But it is said his long tenure at the agency and reputation for losing his temper could complicate his ability to effect cultural change.

Gruenberg, who was appointed by President Biden to lead the agency for a second term in 2022, joined the FDIC board in August 2005 and has led the agency for nearly 10 of the last 13 years.

In a message to employees on Tuesday before the report’s release, seen by the Journal, Gruenberg said employees “reported painful experiences of mistreatment and feelings of fear, anger and sadness.”

“To everyone who has experienced sexual harassment or other misconduct at the FDIC, I would like to reiterate how deeply sorry I am,” he wrote. “I would also like to apologize for any lapses on my part.” He vowed to implement the recommendations in the report, citing the 13-page action plan the agency released in December.

The report’s findings include that employees reported misconduct related to the action plan by several managers who were assigned leadership responsibilities.

This article will be updated as news emerges.

Write to Rebecca Ballhaus at [email protected] and Andrew Ackerman at [email protected]

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