A failure to provide a workplace safe from sexual harassment, discrimination, and other interpersonal misconduct went on “for far too many employees and for far too long,” according to a report issued Tuesday by a special committee of the board of the federal bank deposit insurance agency.
The report places responsibility for the misconduct and culture directly at the top – with the office of the board Chairman Martin Gruenberg. However, it makes no recommendation for Gruenberg’s removal or disciplining, indicating that is up to the Biden administration, Congress, or both.
The report by the special panel of the Federal Deposit Insurance Corp. (FDIC) Board (prepared by the New York- and D.C.-based law firm Cleary Gottlieb Steen & Hamilton LLP, and overseen by the panel) also found that the agency’s management responses to allegations of misconduct “as well as the culture and conditions that gave rise to them have been insufficient and ineffective.”
To prevent those conditions from continuing and address another 10 “root causes” of workplace misconduct and culture issues identified in the report, the special committee’s report recommended “cultural and structural changes” at the agency. That starts at the top, the report of the committee stated, with the agency’s leadership – particularly board Chairman Martin Gruenberg.
After noting that Gruenberg has been in a leadership position at the agency for 20 years – including as board chairman for 10 of the last 13 years – the report said that leading cultural transformation at an agency that he has led for so long “presents unique challenges for Chairman Gruenberg, as do the incidents of – and resulting reputation for – losing his temper and expressing anger with staff.”
The report said there must at least be a “genuine and sustained commitment to lead a culture change, accompanied by a recognition and acknowledgement that such change is necessary because of failings of the past,” including those of Gruenberg’s.
Among the recommendations made in the report are steps to protect the victims of misconduct, the appointment of a culture and structure transformation monitor, the retention of a third-party expert to assist and advise in implementation, structural changes in the investigations function, an independently run hotline, and new and revised policies and trainings.
In a message to employees released by the agency, Gruenberg took some responsibility. “To anyone who experienced sexual harassment or other misconduct at the FDIC, I again want to express how very sorry I am,” the chairman stated. “I also want to apologize for any shortcomings on my part. As Chairman, I am ultimately responsible for everything that happens at our agency, including our workplace culture.”
Gruenberg said he personally pledged to the agency’s workers that the FDIC will implement the recommendations in the report.
In a separate statement, co-chairman of the committee Jonathan McKernan (who also serves on the FDIC Board) said the report “establishes the urgent imperative of a cultural transformation at the FDIC led by those with the leadership capacity to effectuate that change.”
The other co-chairman of the committee, Acting Comptroller of the Currency Michael Hsu (also an FDIC Board member), in his own statement, described the review leading to the report – which included input from more than 500 current and former agency employees – as “thorough, balanced, focused, and nonpartisan.”
In a footnote on its press release announcing the release of the report, the FDIC said the law firm that prepared the report was asked only to conduct a review of allegations of sexual harassment and other interpersonal misconduct at the FDIC and management’s response to such harassment and misconduct, as well as the FDIC’s workplace culture.
“Cleary Gottlieb was not asked, nor did it assess, whether particular individuals within the FDIC, such as the Chairman, should be removed or otherwise disciplined for alleged misconduct,” the footnote explains. “Any decisions on that subject can only be by those who have the requisite authority and following the appropriate process.”
FDIC Special Review Committee Releases Independent Report on Workplace Misconduct and Culture
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