William Simpson
The White House said Monday that the president of the Federal Deposit Insurance Corporation will step down, a move that follows the release of a scathing report on the agency’s toxic workplace culture.
The White House said Martin Gruenberg will step down once a successor is named and that President Biden will name a replacement “soon.” The announcement came after the top Democrat on the Senate Banking Committee on Monday called for Gruenberg’s removal.
Biden expects the FDIC to “reflect the values of decency and integrity and protect the rights and dignity of all employees,” Deputy Press Secretary Sam Michel said in a statement.
Kevin Lamarque/REUTERS
Gruenberg held positions at various levels of leadership at the FDIC for nearly 20 years, and this was his second full term as chairman of the FDIC. His long tenure at the agency made him largely responsible for its toxic work environment, according to the independent report outlining the agency’s problems.
The 234-page report released Tuesday by law firm Cleary Gottlieb Steen & Hamilton cites incidents of stalking, harassment, homophobia and other violations of labor regulations, based on more than 500 employee complaints.
The report says the agency fostered a workplace rife with harassment and intimidation that primarily targeted women or people from underrepresented groups.
“[F]or too many employees and for too long, the FDIC has failed to provide a workplace safe from sexual harassment, discrimination, and other interpersonal misconduct,” the report states.
Employees harbored a fear of retaliation that dissuaded them from reporting misconduct, and the report noted that one worker said he was contacting the law firm using a VPN and someone else’s email out of fear that executives seniors knew about your complaint.
Among the misconduct described in the report:
- A worker said she feared for her physical safety after a colleague stalked her and continued to send her text messages, including texting partially nude women engaged in sexual acts, even after she filed a complaint about it.
- A supervisor at a local office routinely talked about his female employees’ breasts and legs, as well as their sex lives.
- A senior bank examiner unexpectedly sent a text message about his genitals to an examiner while she was on duty at a field office.
- Workers who are part of underrepresented groups were told by colleagues that they were “only hired” because they were members of those groups and that they were “token” employees hired to fulfill a quota.
Gruenberg was also criticized in the report, citing reports from employees that he sometimes lost his temper and treated workers in a “humiliating and inappropriate manner.”
The findings about the FDIC’s workplace culture come after the Wall Street Journal published a November investigation that alleged male employees of the agency engaged in harassment, such as sending obscene photos to female employees, but still kept their jobs.
The FDIC is one of several regulators of the U.S. banking system. The Depression-era agency is best known for managing the nation’s deposit insurance program, which insures Americans’ deposits of up to $250,000 to protect them in case their bank fails.
Before Monday, no Democrat had called for Gruenberg’s removal, although several came very close. But Ohio Sen. Sherrod Brown, the top Democrat on the Senate Banking Committee and who faces a difficult re-election campaign, issued a statement Monday calling for Gruenberg’s resignation, saying his leadership at the FDIC could no longer be trusted.
Gruenberg was questioned over two days last week on Capitol Hill in hearings largely focused on the FDIC’s workplace culture and the flaws disclosed in the report prepared by an outside law firm.
“After chairing last week’s hearing, reviewing the independent report, and receiving further input from FDIC officials to the Banking and Housing Committee, I am left with one conclusion: There must be fundamental changes at the FDIC,” Brown said in a statement.
Republicans have been calling for Gruenberg’s departure for some time and have criticized the White House for not calling for his immediate departure.
— additional reporting by Aimee Picchey.
