Several lawmakers are urging Federal Deposit Insurance Corp. Chair Martin Gruenberg to step down following a scathing report on the ills of the agency he sits leads.
“It’s clear the FDIC, its mission, and most importantly, its employees, have all suffered under Chairman Gruenberg’s leadership,” said Sen. Tim Scott, R-SC, following the release of a Cleary Gottlieb report Tuesday, which had been commissioned in the fall following a bombshell Wall Street Journal article on the agency’s “old boys club” culture.
“It’s time for Chairman Gruenberg to resign so the FDIC can move forward with the leadership it deserves and desperately needs to ensure employees and the important work of this agency are supported,” said Scott, ranking member of the Senate Banking Committee.
Cleary Gottlieb, a New York City law firm, in a 234-page review of the FDIC’s workplace culture published Tuesday, found that that “for far too many employees and for far too long, the FDIC has failed to provide a workplace safe from sexual harassment, discrimination, and other interpersonal misconduct.”
“We also find that a patriarchal, insular and risk-averse culture has contributed to the conditions that allowed for this workplace misconduct to occur and persist, and that a widespread fear of retaliation, as well as a lack of clarity and credibility around internal reporting channels, has led to an underreporting of workplace misconduct over the years,” the firm wrote. “Management’s responses to allegations of misconduct, as well as the culture and conditions that gave rise to them, have been insufficient and ineffective.”
Hundreds of employees and former employees relayed to Cleary Gottlieb misconduct they allege to have experienced while working at the FDIC, with some calling out Gruenberg by name for being at times harsh, aggressive and easily angered.
Gruenberg has been at the helm of the agency for 10 of the past 13 years. While others called him more often “low key” and “soft spoken,” several moments of ire were relayed to auditors by current and former employees, with some corroborated by Microsoft Teams chats reviewed by Cleary Gottlieb amid the audit.
Scott first called for Gruenberg’s resignation last year following the initial Journal report. Now, he’s on a growing list of lawmakers, including several other Republicans and one Democrat, who have reiterated that the change necessary within the FDIC cannot happen with Gruenberg still at the top.
“I am appalled and deeply disturbed by the details of widespread sexual harassment and discrimination at the FDIC outlined in the report released today, and I commend the brave individuals who came forward to shed light on these abuses,” Rep. Bill Foster, D-IL, said Tuesday. “Sweeping changes must be made to mend the toxic work environment that has run rampant for far too long, and that starts with a change of leadership. It is time for Chair Gruenberg to resign.”
Key Democrats like Sen. Elizabeth Warren of Massachusetts, well-known for being tough on financial industry matters, haven’t made similar calls as of Thursday afternoon. Sen. Sherrod Brown, D-OH, stopped short of calling for Gruenberg’s resignation.
“The FDIC needs to be fixed. The women and men who work there deserve better,” said Brown, who leads the Senate Banking Committee. "Chair Gruenberg must accept responsibility and must immediately work to make fundamental changes to the agency and its culture.”
Should Gruenberg resign, his likely successor would be Vice Chair Travis Hill, a Republican.
Outcry for Gruenberg to step aside — or a response from the FDIC chief — could come next Wednesday, when Gruenberg and other regulators testify at the House Financial Services Committee for a previously scheduled hearing on regulatory oversight.
The FDIC did not return a request for comment by press time.
