Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg faced severe criticism during a May 15 House of Representatives committee hearing. Caitlin Mullen, at Banking Dive, covered the leader’s Congressional appearance and questioning.
Lawmakers, particularly Republicans, accused Gruenberg of fostering a toxic work environment and called for his resignation. The accusations follow a damning report by the New York law firm Cleary Gottlieb, which highlighted deep-seated issues within the FDIC, including sexual harassment and discrimination.
FDIC Chairman Gruenberg Takes Blame for Toxic Workplace Issues
During the hearing, Gruenberg acknowledged the report’s findings and expressed a deep commitment to addressing the issues.
Further, the FDIC chairman expressed a personal level of culpability for the tone of the workplace, saying, “I also acknowledge my own failures as chairman both in failing to recognize how my temperament in meetings impacted others and for not having identified deeper cultural issues at the FDIC sooner.”
Despite this admission, however, many lawmakers doubted his ability to lead the necessary transformation within the agency.
Cleary Gottlieb Report: Misogyny, Fear, and Unchecked Abuse at FDIC
The 234-page Cleary Gottlieb report comprised testimonies from over 500 current and former FDIC employees. It described the FDIC’s culture as “misogynistic” and “insular,” with a widespread fear of retaliation.
Overall, the report painted a bleak picture of the FDIC, revealing numerous instances of misconduct that went unaddressed for years.
FDIC Announces Reforms to Address Workplace Culture
Gruenberg outlined several steps the FDIC is taking to address the report’s recommendations. These include:
- Appointing a transformation monitor to oversee the implementation of the recommendations
- Establishing an independent professional conduct office to handle complaints and disciplinary actions
Gruenberg’s remarks stressed the organizational need for a timely response to the testimony. “To restore credibility with our workforce we must act swiftly on the report’s recommendations and demonstrate a commitment to making fundamental change,” he said.
Lawmakers‘ Condemn FDIC Chairman Over Bank Culture Issues
Republican lawmakers were particularly vocal in their criticism.
Rep. French Hill (R-Ark.) accused Gruenberg of a “horrible double standard,” noting that any executive leading a bank with such a toxic culture would be removed immediately. Rep. Bill Huizenga (R-Mich.) went further, telling Gruenberg, “You’re the wrong person for the job to clean up this mess.”
FDIC Accepts Workplace Culture Report Recommendations
Gruenberg assured lawmakers that the FDIC accepts all of the report’s recommendations and has already started implementing some of them. These steps include hiring an independent third-party expert to assist with the agency’s efforts and issuing requests for proposals to address the issues highlighted in the report.
FDIC Reform Stalled?
Despite Gruenberg’s assurances, lawmakers remain skeptical. They questioned whether the steps outlined would be sufficient to change the deeply entrenched culture within the FDIC. Some suggested that more drastic measures, including firing more people, might be necessary to bring about real change to the work culture at FDIC.
For additional detail, read the original article by Caitlin Mullen on Banking Dive.
