Strip Clubs, Lewd Photos And A Boozy Hotel: The Toxic Atmosphere At Bank Regulator FDIC #BitcoinFixesThis #GotBitcoin
“Obviously if I walked into this office and you were naked, I’d f— you right here,” he said. She was so stunned that she didn’t say anything and never filed a complaint. (See Below) Strip Clubs, Lewd Photos And A Boozy Hotel: The Toxic Atmosphere At Bank Regulator FDIC #BitcoinFixesThis #GotBitcoin
Employees say sexual harassment, misogyny pervade federal agency tasked with ensuring stability of nation’s banks, driving women to leave.
Senior bank examiners texted female employees photos of their penises.
All of the men remained employed at the agency.
A toxic work environment at the FDIC, one of the nation’s top banking regulators, has for years caused employees to flee from an agency they say enabled and failed to punish bad behavior, according to a Wall Street Journal investigation based on interviews with FDIC employees as well as legal filings, union grievances, Equal Employment Opportunity complaints, emails, text messages and other internal documents.
A cultural reckoning on sexual harassment, sexism in the workplace and the #MeToo movement has transformed offices in recent years. Yet the FDIC continues to show a hesitance to impose harsh discipline on managers accused of misconduct, employees said.
Female examiners left the FDIC because of what they say was a sexualized, boys’ club environment and the belief they were consistently given fewer opportunities than their male counterparts, according to interviews with more than 100 current and former employees, including more than 20 women who quit.
While traveling to banks across the country, where regulators are meant to evaluate banks’ financial stability and compliance with regulations, male examiners talked openly about female colleagues’ appearances.
A former female employee recalled her male colleagues saying women needed to use sex to get ahead at the FDIC, as they stared at her.
The agency tolerated a heavy drinking culture. The FDIC’s 11-story hotel outside Washington, where out-of-town employees stay when attending training, was a party hub, where people have vomited in the elevator and urinated off the roof after nights of heavy drinking.
The carousing spawned an Instagram account that posted in 2021: “If you haven’t puked off the roof, were you ever really a FIS?”—referring to a bank examiner-in-training.
On Monday, after this article was published online, FDIC Chairman Martin Gruenberg said that in response to the Journal’s investigation the agency has hired the law firm BakerHostetler to look into alleged harassment and discrimination, according to a video sent to staff.
Gruenberg said the law firm would conduct a “top-to-bottom assessment” and that changes would be implemented if they were determined to be needed.
In 2020, the agency’s inspector general found the FDIC’s policies for preventing, identifying and disciplining sexual harassment fell short. It called the agency’s tracking of misconduct allegations “decentralized, untimely, incomplete, and inaccurate.”
It said the agency wasn’t able to identify all the allegations of sexual misconduct employees had made and was unable to track patterns of harassment by individuals or in certain offices.
The FDIC agreed to changes but disagreed with the IG’s conclusion that its antiharassment program was inadequate. The FDIC told the Journal it hasn’t identified issues related to sexual harassment since 2020 in listening sessions, annual surveys, exit surveys and meetings with employee resource groups.
An FDIC official said, “Harassment in any form is contrary to the FDIC’s values and our deep commitment to fostering a diverse and inclusive workplace.” She said the agency has training, reporting and oversight programs aimed at creating a “safe and equitable environment where all employees can feel valued and respected.”
When the agency identifies misconduct, “we investigate and take appropriate action,” she said. The agency seeks employees’ input on how to improve the culture through a variety of employee resource groups and will “continue to conduct periodic reviews” of its programs and policies, she said.
Reports of the agency’s problems stretch back more than a decade and have persisted through changes in leadership, administrations and internal investigations.
“It was just an accepted part of the culture,” said Lauren Lemmer, a former examiner-in-training.
She quit her job in 2013 after three years in which she said she was denied opportunities to advance, followed back to her Dallas hotel room by a male colleague during training, invited to a strip club in Seattle by other bank examiners and sent an unsolicited naked photo by a colleague.
Many employees didn’t file complaints about their harassment, fearing retaliation or believing nothing would come of it. When people did complain, the FDIC in multiple instances investigated and substantiated complaints but moved the perpetrators to other offices instead of firing them, which for federal employees can be a difficult process.
The FDIC declined to respond to detailed questions about employees’ drinking, specific employees’ claims of harassment and descriptions of sexualized or inappropriate work environments.
The ‘Wild West’
Current and former employees across the country described a pernicious culture for staff in the FDIC’s regional offices exacerbated by the relative freedom of bank examiners traveling for days or weeks at a time. Some called life on the road the “Wild West.”
One of the female examiners who received a photo of a colleague’s penis was traveling with a team to conduct a bank exam in North Carolina in 2018, according to a text message reviewed by the Journal.
She decided to avoid a confrontation about it because the team was staying at the same hotel and working closely together, she said.
Another examiner, Neha Singh, joined the FDIC’s San Francisco office in 2017 as a trainee, her first job out of college. She was immediately sent out on the road, a typical assignment for trainees.
For examiners in some offices, that could mean traveling as many as 100 nights a year, often with all- or mostly male teams, although travel has been reduced somewhat since the pandemic.
At first, Singh, eager to make friends in a new city, attended team happy hours and spent time with colleagues outside of work. Eventually, she began withdrawing from the FDIC social scene. She continued to feel pressure from her colleagues to come out drinking every night, particularly while traveling, she said.
Examiners accused her of ignoring them when she declined to drink with them. She said one told her, “You seem a little arrogant.” When Singh did join the team for a drink, she believed her male colleagues were tracking how many glasses of wine she drank and urging her to drink more.
“I felt really taken advantage of in a moment where I was totally vulnerable,” she said.
Singh quit the FDIC in 2022, in her first year after earning her commission, the designation needed to be a full-fledged examiner.
She said she was explicit with senior managers in the office that she was leaving because of what she viewed as a culture of harassment and misogyny. One manager told her they had heard similar concerns from other women and knew it was a problem, she said.
The culture that employees described is a drastic departure from the staid nature of the FDIC’s mission. The independent federal agency of fewer than 6,000 employees works to maintain stability and public confidence in the U.S. banking system. It insures deposits and handles the resolution of failing banks.
The agency is funded by insurance premiums paid by banks instead of the federal budget. It has historically drawn congressional interest primarily in response to bank crises.
The agency has been under renewed scrutiny following the major failures this spring of Signature Bank, First Republic Bank and Silicon Valley Bank.
An internal review cited the FDIC’s struggles to retain examiners as part of the reason it didn’t detect problems with some of the failed banks earlier.
About 60% of examiners were men in 2022, down from around 66% in 2004, according to the agency’s annual diversity reports. Men made up 65% of executive management positions last year, up from 63% the previous year, according to the reports.
Trainees receive frequent performance ratings from the employee leading each exam, which affect the kinds of assignments they receive going forward.
Current and former employees said that system intensified the pressure to be part of the in crowd and made them even more reluctant to file complaints, fearing their reviews would drop if they were labeled as difficult.
Kelsi Foutz, a senior risk management examiner who worked in Salt Lake City and San Francisco, said she received a negative performance review in 2018 after an assignment with another office, despite consistently good feedback during the six-week stint.
Foutz said a senior colleague suggested she not raise it with the reviewer, telling her the man “is just intimidated by tall, beautiful women.” Two male managers advised her to “just smile and make him feel good,” she said.
She first experienced the FDIC’s sexualized culture just after joining the trainee program in 2013, when she was 21 and working in a different office. During lunch with an examiner she had become friendly with, he complained to her about his marriage, telling her he wasn’t having enough sex, she said.
“Obviously if I walked into this office and you were naked, I’d f— you right here,” she said he said. She was so stunned that she didn’t say anything and never filed a complaint.
“For the longest time, I didn’t have any perspective,” she said. “It was just normal. You deal with it.”
Foutz quit last year, saying she was fed up with the culture and feeling like opportunities weren’t available for her.
Multiple women said they were repeatedly passed over for assignments to lead bank exams—and then penalized in performance reviews for not having led any bank exams.
Trainees are heavily dependent on their supervisors to assign them the exams they need to ultimately earn their commission. Many women said they felt their male colleagues were able to progress more quickly, in part because they would go golfing and out drinking with their supervisors—and then get plum assignments.
Lemmer joined the FDIC’s Roseville, Calif., office in 2010 as an examiner-in-training. On the road, senior bank examiners would make comments about her appearance and indicate they were skeptical she intended to stay at the FDIC long-term, she said.
Her supervisor, Trevor McIntosh, referred to her as a male colleague’s girlfriend—they weren’t dating—and asked her colleague during golf outings about Lemmer’s sex life, including asking who at the agency was sleeping with her, she said the colleague told her.
Lemmer quit for a job in the private sector before she had finished training to become an examiner because she didn’t see a way to improve her situation.
She never filed a complaint, but when she left she told the field supervisor, Andrea Davis, and human resources about her experience, telling them of McIntosh: “He is a problem.” She said she never heard from them again.
McIntosh’s leadership also rankled other women, who said they felt disadvantaged by a boys’ club environment where McIntosh would hang out with male employees, including at one point visiting a strip club together.
In 2015, an examiner and a union steward, Kevin Burnett, said he raised concerns he had heard about McIntosh—including from Lemmer—with Davis, who asked him to talk directly to McIntosh about the problems. After he spoke with McIntosh, Burnett received a $20 gift certificate for a coffee shop as a thank you.
“Thanks so much for talking with me about your concerns!” read the card, written by Davis and signed by McIntosh in another color ink. “You have demonstrated the FDIC values in the best possible way.”
McIntosh in an interview said he came to Roseville from an FDIC office where supervisors were “blurring the lines between who’s a manager and who’s an employee,” and said he brought that style with him because he had responded well to it.
He said he tried to be inclusive in arranging after-hours activities including golf, soccer and dinners and that he sees himself as a “social coordinator.”
When Davis, Burnett and others brought concerns to him, he wrote a four-page memo to Davis outlining how he would improve his communication style, he said. Referring to Lemmer as her colleague’s girlfriend was “completely inappropriate,” he said, but he denied making any sexual comments and said he didn’t recall Burnett raising those comments to him.
McIntosh acknowledged going to a strip club with male employees after hours while they were traveling but said he didn’t recall it being raised as an issue and that he didn’t know why it would have been.
He said that after the 2015 discussions with Davis and Burnett, he didn’t hear concerns about his conduct again and said he took that as a sign that “the steps I had taken to improve my communication style throughout the office were productive.”
He remained in his job as a supervisor until December 2022, when he moved to a nonmanagerial role of similar seniority. He said he applied for the job to improve his work-life balance.
Davis didn’t respond to requests for comment.
Resignations of examiners-in-training more than doubled in 2021 to 54 from 24 the previous year, and rose to 62 in the first nine months of 2022, the FDIC’s IG said in a February report, without citing any causes.
The agency hires fewer than 200 trainees every year. Only 48% of the class of examiners hired in 2017 remain at the agency, according to numbers provided by the FDIC.
The personnel churn is expensive—it costs about $400,000 to train a commissioned examiner over four years, according to the IG.
The FDIC said its data show that since 2015, female examiners have left the agency at similar and sometimes lower rates compared to male examiners. Last year, 12.2% of female examiners left the agency, compared to 11.8% of male examiners.
The agency, however, has highlighted its struggle to attract and retain female examiners in every annual diversity report since 2011.
In some offices, particularly those that required less travel, employees said they found the environment professional and didn’t experience inappropriate behavior or harassment.
The FDIC has more than 80 office locations, and current and former employees said many of the regions operate as their own fiefdoms, meaning a regional or field office’s culture depends heavily on the people in charge.
Randal Ditch, a supervisory examiner in Denver, was demoted in 2014 to a nonsupervisory examiner position in Tulsa, Okla., after having sex twice with a subordinate female employee and a number of other rule violations, according to records of his case before the Merit Systems Protection Board, an independent panel that hears appeals from federal employees over personnel decisions.
Ditch had urged the woman to not “be a pussy” and drink a shot of whiskey during working hours, the records show. He also told the woman, after she rebuffed him, that he had feelings for her and was going to try to reassign her.
He told another subordinate employee that he had slept with the woman, the records indicate.
In deciding to demote Ditch rather than hand down a harsher penalty, the agency considered mitigating factors including his “25 years of satisfactory performance,” lack of disciplinary record and that he “got along with fellow co-workers.”
Ditch appealed his demotion, denying he committed the alleged misconduct and saying the discipline was “too severe,” according to documents provided to the Journal in response to a public-records request.
The MSPB denied his petition in February 2023.
Ditch didn’t respond to requests for comment. He left the agency this year.
Depending on the nature of the complaint, “if they don’t believe a manager at a field office or a regional office was doing the right thing, rather than fire them, they may move them, to give them another chance,” said Glen Bjorklund, a former senior human-resources official at the FDIC who left in 2011.
An examiner-in-training complained about harassment from Jim Kiss, a field supervisor in San Francisco, to his trainee liaison as early as 2014, according to an email reviewed by the Journal.
Kiss remained in charge until this summer, when multiple employees further complained to management, according to current and former employees.
Kiss remarked on employees’ appearances, made homophobic and harassing comments and talked about his drug use in the office, former employees said. He bragged about his sex life and talked about the importance of sex in keeping a marriage strong.
Management had started looking into the working environment in the field office in 2022, a former FDIC official said. This summer, after the Journal began speaking with women about Kiss’s behavior, he was moved to a temporary position of acting case manager. He is currently on leave.
Internal investigators are looking into Kiss’s leadership, according to current and former employees.
Kiss didn’t respond to requests for comment.
Also in San Francisco, multiple employees in 2013 complained to management that field supervisor Hien “Jimmy” Nguyen made sexist and discriminatory comments, according to former employees, emails, texts and an EEO complaint reviewed by the Journal.
Nguyen suggested a female employee who had recently earned a new compliance certificate should get her “Mrs.” designation next. He made sexual comments about women’s appearances.
He described gay men in the office as “my little princesses” and invited male employees to a so-called sex cafe that the city of San Jose later cracked down on, according to employees and documents.
The FDIC demoted him to an examiner position and moved him to the agency’s office in Raleigh, N.C., telling employees he was going to spend more time with his family, former employees said.
“It was my error and lack of judgment,” Nguyen said in an interview. “I moved on, and I’ve learned from it.” He said he felt his punishment was harsh and described the experience as traumatic. He said the establishment to which he invited employees wasn’t a sex cafe and “more of a club/strip joint.”
Three years after he was transferred, Nguyen got a job at the Office of the Comptroller of the Currency, another federal bank regulator, and is now a manager there.
“People came forward with horrific allegations that were substantiated about treatment of women and marginalized people,” said Burnett, who was among those who complained. “There was no recognition that we were mistreated, no recognition that it was wrong, no recognition that the environment they placed us in was inappropriate.”
Drinking On The Roof
The agency’s IG report in 2020 cited a survey the IG conducted in 2019 that found 8% of more than 2,300 respondents said they had been sexually harassed. Some 38% of those harassed said they didn’t report the incidents for fear of retaliation.
The FDIC received 12 allegations of sexual harassment from 2015 to 2019, the report said.
In response, the agency agreed to improve training and tracking of allegations and required preventive or corrective action to be taken within 60 days of receiving notice of a report of harassment, among other changes.
The FDIC’s deputy to the chairman and chief operating officer at the time, Arleas Upton Kea, said in the response to the IG that the percentage of employees who had experienced sexual harassment was “well below the government average.”
She added that the IG’s report “ignores the possibility” that employees might want to address their complaints in a more informal way.
In 2021, a survey by the MSPB arbitration panel found that 18% of female FDIC employees reported having experienced some form of sexual harassment in the previous two years, four points higher than in its previous survey in 2016.
A center of the FDIC’s party culture was the agency’s hotel. The FDIC spent more than $100 million in the 1980s to build a training complex in Arlington, Va., that included a hotel for agency staff with more than 350 rooms, an outdoor pool and a rooftop patio. The FDIC said the hotel and training complex save the agency money.
Employees, from new hires to supervisors, often gathered on the roof for drinks, buying alcohol at the nearby liquor store. Some employees joked that the hotel is like an embassy: If they can get back to the hotel after creating chaos at nearby bars, they’ll be fine.
Trips to the complex eased during the pandemic but have rebounded since then, with employees as recently as this summer drinking on the roof and hitting nearby bars before arriving hungover at training the next day, a current employee said.
The FDIC said if it learned an employee was habitually drinking intoxicating beverages it would be grounds for a personnel investigation and potential removal.
One FDIC employee lived near the hotel and said she gave the hotel staff her number in case of emergency. She said in recent years until she left the agency, she on multiple occasions received late-night calls that required her to run over and deal with the employees stumbling back in. On two occasions, she said she had to make sure employees didn’t need to go to the emergency room.
In 2016, an examiner-in-training was charged with driving under the influence when he was found passed out behind the wheel of a running vehicle outside the FDIC hotel, according to police records. He pleaded guilty, paid a fine and had his license suspended.
Two years earlier, an examiner who taught a compliance class to employees was arrested at the hotel past midnight after throwing a party in his room, where he became so inebriated that other employees felt they were being held hostage as security repeatedly called the room, according to current and former employees.
He was charged with public intoxication, pleaded guilty and paid a fine, court records show.
Neither man was fired.
‘What the Hell Is Going On At The FDIC?’ Lawmakers Grill Agency Chairman
Martin Gruenberg tells Senate panel he is ‘deeply troubled’ by accounts of alleged harassment, toxic culture within bank regulator raised by Wall Street Journal investigation.
Senators on Tuesday questioned Federal Deposit Insurance Corp. Chairman Martin Gruenberg over the agency’s handling of allegations of harassment and discrimination revealed by a Wall Street Journal investigation.
“What the hell is going on at the FDIC?” asked Sen. John Kennedy (R., La.).
Gruenberg told a Senate panel he is “personally disturbed and deeply troubled” by the allegations. He said he was previously unaware of the allegations of workplace problems before the Journal article.
On Monday, the Journal published an investigation that found a toxic work environment at the FDIC had for years caused women to quit the agency.
In a previously scheduled hearing before the Senate Banking Committee, the panel’s chairman, Sherrod Brown (D., Ohio) asked Gruenberg what the agency was doing to address the issues raised in the Journal’s report.
“It’s quite clear that we’ve had employees at the FDIC subjected to experiences that simply are unacceptable and can’t be tolerated,” Gruenberg said. “It’s really going to be incumbent on the agency to take all actions necessary to come to grips with this and to address it effectively.”
He said the agency already has “appropriate policies and procedures in place.” The challenge, he said, is that “it’s really on management to instill the confidence in our employees to utilize those procedures and policies in a way that they can feel safe and secure.”
In his opening statement before the committee, Gruenberg said the agency is conducting a “comprehensive review” of the workplace culture. Gruenberg told staff on Monday that the agency had hired a law firm, BakerHostetler, to lead that review.
Gruenberg was nominated by President Biden last fall to serve a second stint as the agency’s chairman. He first joined the FDIC in 2005.
Kennedy, noting Gruenberg’s near 20-year tenure at the agency, asked the chairman what he had done, as a member of the board at the time, to address a critical 2020 report by the inspector general that found the agency’s sexual harassment polices fell short.
The report said the agency wasn’t able to identify all the allegations of sexual misconduct employees had made, nor was it able to track patterns of harassment by individuals or in certain offices.
Gruenberg responded that he wasn’t chairman at the time, and that the chairman typically takes the lead on such matters.
“You didn’t do anything, did you?” Kennedy asked.
“Not at that time, no,” Gruenberg replied.
“You and your colleagues ought to hide your head in a bag,” Kennedy said.
Sen. Mike Rounds (R., S.D.) asked Gruenberg if he was aware of the allegations of a toxic culture before publication.
“As a general matter, no, senator,” Gruenberg replied.
Sen. Jon Tester (D., Mont.) said the allegations in the report were “very damning” and asked Gruenberg whether he believed they amounted to fireable offenses.
“You really have to look at individual cases,” Gruenberg said. “It depends on the facts of the case and the law.”
Sen. Catherine Cortez Masto (D., Nev.) asked Gruenberg how long the review of the culture would take and what employees could do in the meantime to voice concerns.
“The work is just beginning,” Gruenberg said, adding that he hopes the review would take 90 days or less. He said the agency has multiple processes in place for employees to report problems, but that, “We obviously want to look at that and see how effective that is.”
On Tuesday, House Republicans requested the FDIC’s inspector general provide a briefing on the agency’s workplace culture, saying they were disturbed by allegations of sexual harassment, misogyny and other misconduct revealed in the Journal investigation.
In a letter to the acting inspector general, Tyler Smith, House Financial Services Committee chairman Patrick McHenry (R., N.C.) and two subcommittee chairmen said they aimed to “ensure that civil servants of our financial regulators are able to perform their duties without fear of harassment or retaliation.” They requested Smith provide a briefing to committee staff by Nov. 27.
Gruenberg is scheduled to testify alongside other federal regulators in another previously scheduled hearing before the House Financial Services Committee on Wednesday, where he could also face questions about the agency’s workplace culture.
On Monday, the Republican-led committee said it would “get to the bottom” of the allegations raised in the Journal investigation and criticized Gruenberg directly.
“Chair Gruenberg has been on the Board for almost 20 years and has failed to address these entrenched problems,” the committee posted on X, formerly known as Twitter.
The Journal’s investigation, based on interviews with more than 100 current and former FDIC employees, found that the agency has been hesitant to impose harsh discipline on managers accused of misconduct, in several instances moving supervisors who were the subject of complaints to other offices rather than imposing harsher measures.
Female employees described a sexualized, boys’ club environment that they say led them to leave the agency over the years, feeling they were consistently given fewer opportunities than their male counterparts.
FDIC Chair ‘Deeply Troubled’ by Workplace Misconduct Claims
* Martin Gruenberg Responds To Reports Of ‘Boys’ Club’ Culture
* FDIC Examiners’ Behavior Led Women To Quit Jobs, WSJ Reported
The head of the Federal Deposit Insurance Corp. told lawmakers on Tuesday that his agency had launched an investigation into reports of misogynistic culture among bank examiners that prompted women to quit the agency.
FDIC Chairman Martin Gruenberg said the agency had no tolerance for the alleged misconduct in its workplace, which was detailed in a Wall Street Journal article
The newspaper’s investigation found that female examiners left the FDIC after facing what the article described as a “sexualized, boys’ club environment,” and because they said they were given fewer opportunities than male colleagues.
“I am personally disturbed and deeply troubled by this report,” Gruenberg told the Senate Banking Committee. “The FDIC is conducting a comprehensive review, including engaging an independent third party, to ensure that we understand the nature of these issues and take all appropriate actions to address them.”
Gruenberg said the review would look into conduct across the agency and he hoped the study would be completed within 90 days. He added that agency management must make employees confident that they are safe to raise complaints and that officials will keep those complaints confidential.
Earlier on Tuesday, key House Republican lawmakers demanded that the FDIC inspector general “expeditiously provide a briefing on the FDIC’s workplace culture.” They asked for a briefing later this month.
The work of bank examiners has been under scrutiny this year since multiple midsize lenders collapsed. In April, following the failure of Signature Bank, the FDIC said its examiners were too slow to respond to problems at the bank, partly due to a staffing shortage in its New York office.
The FDIC said that “resource challenges” in that office kept it from adequately staffing an examination team dedicated to the lender.
In addition to Gruenberg, Tuesday’s hearing features top banking watchdogs at the Federal Reserve and Office of the Comptroller of the Currency. They fielded a range of questions about how regulators were addressing issues raised by collapses of Signature and Silicon Valley Bank in March.
Michael Barr, the Fed’s vice chair for supervision, told lawmakers that his agency’s supervisors are conducting targeted reviews and working to keep tabs on new products being launched by lenders. He also defended regulators’ bid to demand that banks hold more capital.
The banking industry has launched an aggressive lobbying and public-relations campaign against that proposed capital rule. Regulators are currently in the process of taking comments from the public on the plan.
“If there are areas that we can improve the rule, we’re very open,” Barr said. “We want to make sure the rule works right for households and businesses.”
FDIC Chairman Denies Being Investigated, Then Changes Testimony
Banking regulator hired firm that specializes in workplace conflicts after Martin Gruenberg was accused of losing temper.
Federal Deposit Insurance Corp. Chairman Martin Gruenberg testified before a House panel Wednesday that he had never been investigated for inappropriate conduct.
But the FDIC tapped an external investigator more than a decade ago to examine complaints about his temperament, former officials said.
In a previously scheduled hearing before the House Financial Services Committee that followed a Wall Street Journal report that found a toxic workplace culture at the agency, the panel’s chairman asked Gruenberg, “Since you’ve run the agency, you’ve been there for 20 years, have you ever been investigated for inappropriate conduct during your time at the FDIC?”
“No, Mr. Chairman,” Gruenberg replied under oath, as he shook his head.
The chairman, Rep. Patrick McHenry (R., N.C.), said: “I appreciate your candor. I believe the workplace culture starts at the top.”
When the hearing returned from a break, after the Journal contacted the FDIC for comment, Gruenberg told lawmakers he wanted to correct the record. “In 2008, I was interviewed pursuant to a review done in response to a concern raised by an employee and I’m not aware of anything that came out of that review,” he said.
In 2008, then-chairman Sheila Bair asked an external firm that specializes in workplace conflicts and investigations of employee disputes to examine an incident in which Gruenberg, then the vice chairman, allegedly lost his temper with a senior female official for not clearing with him the timing of a coming senior management conference, which he couldn’t attend, current and former officials said. Bair was told it was part of a pattern of behavior by Gruenberg, the officials said.
The firm interviewed senior FDIC officials in May 2008 and wrote a report on their probe, which they billed as a “management inquiry,” according to documents reviewed by the Journal.
The female official told the investigator that during the meeting, she had grown concerned that Gruenberg might grab her notes out of her hands and rip them up, some of the officials said.
Bair spoke to Gruenberg about his conduct at the time and consultants also met with him to discuss his communication style, the officials said. Gruenberg told officials he was surprised the female official had been upset by his behavior.
Gruenberg told the House panel Wednesday that he would be willing to share the report with Congress and said no settlements resulted from the inquiry.
The FDIC declined to make Gruenberg available for an interview and declined to comment.
Last fall, President Biden nominated Gruenberg, now 70 years old, to lead the agency for a second term. During his confirmation process, Republican investigators on the Senate Banking Committee asked employees about Gruenberg’s temper, current and former employees said.
Among the incidents they examined was the 2008 meeting and subsequent investigation of it, officials said. Investigators were also told that Gruenberg, separately from that meeting, had broken multiple office phones in frustration, the employees said.
On a bipartisan call with Gruenberg, Republican investigators asked him about the dispute and whether he had thrown phones, former officials said. He denied acting inappropriately when meeting with the female official and denied throwing phones.
Lacking confirmation of the allegations, the committee didn’t raise questions on the matter in Gruenberg’s public confirmation hearing.
Gruenberg was confirmed by a 45-39 vote.
The Journal’s investigation found that a toxic workplace culture had for years prompted women to quit the agency. Many employees were reluctant to raise complaints because they feared retaliation and believed they wouldn’t be addressed.
When employees did file complaints, the FDIC in multiple instances moved the perpetrators to other offices rather than seeking their dismissal.
In response, the FDIC said it hired a law firm to investigate allegations of harassment and discrimination. On Wednesday, Gruenberg said he was disturbed by the allegations and that addressing workplace problems “is a top priority for the FDIC now.”
Wednesday marked the second consecutive day of lawmakers demanding to know how Gruenberg plans to address problems with the FDIC’s workplace culture.
Rep. Maxine Waters of California, the top Democrat on the House Financial Services Committee, said she was “very troubled” by the Journal report that surfaced allegations of harassment and discrimination at the agency stretching back a decade.
She asked Gruenberg to provide a detailed written plan on steps the FDIC would take to address the problems within a month.
“It’s quite clear that there have been FDIC employees who experienced horrendous treatment,” Gruenberg said.
Waters also asked regulators from the Federal Reserve, Office of the Comptroller of the Currency and National Credit Union Administration to provide written plans in the next 15 days describing how the agencies would review their sexual harassment policies and procedures. All agreed.
Earlier Wednesday, two Republican members of the FDIC board called for the board—not just the chairman—to oversee an investigation into allegations of harassment and discrimination at the agency.
“The conduct reported by The Wall Street Journal earlier this week has no place at this agency or anywhere in the workforce and should not be tolerated,” Vice Chairman Travis Hill and Director Jonathan McKernan said in a joint statement.
Gruenberg said Monday that the agency had hired a law firm to conduct a “top-to-bottom assessment” of the agency’s culture, after a Journal investigation revealed a toxic workplace environment had for years caused women to quit the agency.
In a hearing before a Senate panel Tuesday, Gruenberg said he hoped the review would take less than 90 days.
Gruenberg said in a statement that he spoke with the board members and discussed the need for board involvement. “I welcome it,” he said. “Addressing these issues and ensuring a professional work environment for employees will require the full engagement of the Board.”
In their joint statement, Hill and McKernan called for the board to be updated throughout the review, and said the law firm must “have the latitude and time needed to conduct a thorough, holistic review.”
The FDIC board is made up of the chairman, the two Republicans, and two Democrats: the director of the Consumer Financial Protection Bureau and the acting comptroller of the currency. Hill and McKernan were confirmed to the board last year. The two Democrats joined in 2021.
Hill said separately that the agency’s audit committee, which he chairs, plans to review the investigation and request monthly updates from BakerHostetler, the law firm conducting the assessment.
On Wednesday, McKernan, in a series of posts on X, formerly known as Twitter, also called for the FDIC board to release staffers from confidentiality agreements, expand the investigation to cover all aspects of workplace culture, and “figure out why no perpetrator was fired—even one who texted nude photos to co-workers.”
He also advocated for forming a board committee to direct the investigation. “It is hard for an agency to investigate itself; this review is more likely to be objective if the outside law firm is directed by a committee of independent FDIC board members.”
The statements from two members of the five-person board add to the pressure on Gruenberg over allegations of harassment and discrimination.
In a previously scheduled hearing Tuesday before the Senate Banking Committee, lawmakers grilled Gruenberg over the agency’s handling of those issues. “What the hell is going on at the FDIC?” asked Sen. John Kennedy (R., La.).
Democratic members of the committee, including Elizabeth Warren of Massachusetts and Jon Tester of Montana, also expressed concerns about the allegations.
Gruenberg hasn’t provided specifics on the parameters of the investigation into workplace culture or how it will proceed. In a video to staff on Monday, he encouraged them to participate.
He told the Senate panel Tuesday that the agency had “appropriate policies and procedures in place,” but that the challenge was for management to “instill the confidence in our employees to utilize those procedures and policies in a way that they can feel safe and secure.”
FDIC Chair, Known For Temper, Ignored Bad Behavior In Workplace
Martin Gruenberg set a tone that left alleged harassment and discrimination unpunished at the bank regulator. After a WSJ investigation, he came under scrutiny at congressional hearings.
In 2019, the FDIC’s No. 2 legal official left a ranting, cursing voicemail for an employee criticizing her work. The federal bank regulator paid that employee a $100,000 settlement because of it, former officials said.
The legal official kept his job. Last year, Chairman Martin Gruenberg promoted him to become the federal agency’s general counsel.
Now, Gruenberg is under fire for his leadership at the Federal Deposit Insurance Corp. after a Wall Street Journal investigation found a longtime toxic atmosphere with few consequences for bad behavior prompted women to quit the agency.
He faced grilling from Congress on Tuesday and Wednesday in response to the investigation. “What the hell is going on at the FDIC?” asked Louisiana Republican Sen. John Kennedy.
Gruenberg said harassment and discrimination are “completely unacceptable” and said the agency doesn’t tolerate it. He announced that an independent firm would conduct a “top-to-bottom assessment” of the agency. He said he had been unaware of the allegations of workplace problems at the agency prior to the Journal’s reporting.
Yet Gruenberg and his top deputies have been involved in decisions over high-level examples of alleged sexism, harassment and racial discrimination in which the agency didn’t take a hard line with individuals accused of misconduct, according to current and former FDIC officials.
Gruenberg himself has built a reputation for bullying and for having an explosive temper, the officials said. Over nearly two decades at the FDIC—including leading the agency from 2011 to 2018 and becoming chairman a second time last year—Gruenberg has berated and cross-examined staffers, questioned their loyalty and accused them of keeping information from him, they said.
The FDIC hired an external investigator to look into Gruenberg’s behavior in 2008, when he was vice chairman, after he allegedly lost his temper with a senior female FDIC official and castigated her.
Gruenberg initially told the House Financial Services Committee in sworn testimony Wednesday that he had never been investigated for inappropriate behavior.
Later in the day, after the Journal contacted the FDIC for comment, Gruenberg said he wanted to correct the testimony and confirmed he had been the subject of an inquiry in 2008.
Gruenberg is known as a micromanager and has a temperament that made employees reluctant to present to him and contributed to some officials’ decisions to leave the agency, officials said. Multiple current and former officials referred to him as a “screamer,” despite his sleepy demeanor in congressional hearings.
Some FDIC officials said they had never seen Gruenberg behave inappropriately, and what some employees described as bullying others described as his prosecutorial nature.
Several former officials said Gruenberg has high expectations for his staff, and many more junior employees said they had been treated respectfully by the chairman.
An FDIC official said the agency “has no higher priority than to ensure that all FDIC employees work in a safe environment where they feel valued and respected. Sexual harassment or discriminatory behavior is completely unacceptable.
We take these allegations very seriously.” The agency has hired a law firm to conduct a review of the agency’s culture, and will “take appropriate actions to address” the issues it identifies, she said.
The agency declined a request to interview Gruenberg.
On Wednesday, Rep. Bill Huizenga (R., Mich.) asked Gruenberg whether he was aware of the incidents of misconduct in the Journal’s investigation, noting that many of them happened “under your watch.”
Gruenberg said he wasn’t, and that the investigative and disciplinary process is typically handled by the legal division. “The board is generally kept out of that,” he said.
On Thursday, two Republicans on the FDIC board called for Gruenberg and the agency’s general counsel to recuse themselves from the investigation into workplace culture.
The agency had earlier in the day canceled a scheduled public meeting of its board. Some Republican senators called on Gruenberg to resign.
Employees said bad workplace behavior has festered at the agency for years because top administrators didn’t fully address problems, whether in regional offices or in the Washington headquarters.
When employees did raise such issues, they said they believed the agency swept the problems under the rug.
Those allegations weren’t exclusive to Gruenberg. A top FDIC official said that in 2009, she told previous Chairman Sheila Bair, who ran the agency from 2006 to 2011, that a prospective senior hire had sexually harassed her years earlier.
After consulting Gruenberg, who had advocated for the hire, Bair went ahead and hired the man, who ended up working in an adjacent office to his accuser.
Later, under Gruenberg’s leadership, the agency’s director of its Office of Minority and Women Inclusion was accused of discrimination, including telling a Black employee that slavery was “not all bad.”
Gruenberg’s deputy reassigned the director to a job in the training division, according to legal filings. The FDIC in the filings said the reassignment wasn’t a demotion and his pay wasn’t reduced.
“When an employee comes to management to voice a concern, they always take management’s side,” said Stephanie Gilliard, a Black senior administrative specialist in Washington who left the agency in 2018 after filing a different lawsuit alleging discrimination and a hostile work environment.
The agency denied her allegations but paid her a $250,000 settlement that year, according to officials. Prior to filing her lawsuit, Gilliard said she reached out to Gruenberg to ask for help but didn’t hear back.
In the Journal’s investigation published earlier this week, based on interviews with more than 100 current and former FDIC employees, female employees described a sexualized, boys’ club environment in regional offices and said they felt they were consistently given fewer opportunities than their male counterparts.
The employees said the agency has been hesitant to impose harsh discipline on managers accused of misconduct, in several instances moving supervisors who were the subject of complaints to other offices rather than imposing harsher measures.
The independent federal agency of fewer than 6,000 employees is one of the nation’s top regulators, tasked with supervising U.S. banks and insuring deposits.
It is funded by insurance premiums paid by banks instead of the federal budget. Congressional interest has primarily come in response to bank crises, such as the bank failures this spring.
An internal review after the failures cited the FDIC’s struggles to retain examiners as part of the reason it didn’t detect problems with some of the failed banks earlier.
Before joining the FDIC, Gruenberg spent nearly two decades on Capitol Hill, where he also developed a reputation for his temper, according to those who worked with him at the time. Some aides recalled hearing him shouting from the hallway.
As senior counsel to former Sen. Paul Sarbanes, a Maryland Democrat, Gruenberg played a key role in crafting the Sarbanes-Oxley Act of 2002, which among other measures emphasized the importance of the “tone at the top” and senior leaders’ responsibility for the culture of their organization.
Promotion For Accused
Harrel Pettway, the legal official who had left the ranting voicemail for an employee, received a letter of reprimand after the 2019 incident, former officials said.
He remained the No. 2 in the legal division, and as Jelena McWilliams, who led the FDIC from 2018 to 2022, was leaving the agency along with her general counsel, she tapped Pettway to serve as his acting replacement.
Gruenberg, who took over as acting chairman when McWilliams left, named Pettway general counsel days later.
Pettway didn’t respond to requests for comment.
In 2009, former Chairman Bair prepared to hire Michael Bradfield, a former Federal Reserve official and protégé of onetime Fed chairman Paul Volcker, to become general counsel.
About that time, a senior FDIC official said she told Bair the man had sexually harassed her and others at the Fed decades earlier. She asked Bair not to hire him.
The official, deputy general counsel Roberta McInerney, said she told Bair that Bradfield had cornered her in his office late at night at the Fed. Bair’s response, she said, was cold.
“That was a long time ago. He’s 74. You don’t have to worry about that now,” McInerney said Bair responded.
Bair raised the allegation with Bradfield, who denied it, a former official said. She also brought it to Gruenberg, who had been pushing for Bradfield to be hired, the former official said.
Gruenberg said he had never heard such allegations about Bradfield and remained supportive of hiring him.
Bradfield’s office ended up next to McInerney’s. On his first day, she recalled, she heard his voice through the wall and began to cry.
“At that point I felt like there was nothing I could do,” McInerney said. “I could have gone to HR and said it was traumatic. But when you do that, it ruins your career—you’re frozen out of everything because you’re a troublemaker.”
McInerney said she was awed by Bair’s smarts and deft leadership, but ultimately felt let down by her.
Bradfield left the agency about a year after he joined and died in 2017. His family didn’t respond to a request for comment via an attorney.
Despite the decision, former employees said Bair was more attuned to the well-being of the agency’s rank-and-file than Gruenberg. She launched an effort to reform the agency’s culture and improve communication between leadership and employees.
The agency ranked No. 1 among best agencies in its size category to work in 2011, her final year as chairman. The agency remained atop the list until 2017.
When the financial crisis hit, many employees said they believed she championed the agency and bolstered its relevance, which strengthened morale.
Still, Bair could also be combative, particularly with senior agency officials, former employees said. A Journal article in 2009, as the nation was emerging from the financial crisis, identified frustration among FDIC employees with Bair’s “head-cracking” management style.
Bair declined to comment on criticism of her leadership style. Her supporters told the Journal she demanded a high level of performance from employees during a difficult time in the financial industry.
Morale among employees has plunged in recent years. The FDIC last year dropped to No. 17 from No. 8 in 2021 in the agency workplace rankings.
The list, put together by the nonprofit Partnership for Public Service, is closely tracked by the agency. Its decline was driven in part by a 10-point drop in its score for effective leadership by senior leaders.
In 2016, Gilliard, the Black senior administrative specialist who sued the agency over discrimination and harassment allegations, said in legal filings that her supervisor and supervisor’s boss had sex in the FDIC parking garage.
She said both supervisors had discriminated against her, including by treating her more harshly than her white colleagues and passing her over for promotions.
The agency moved but failed to strike Gilliard’s deposition on the alleged affair between her supervisors—which included “references to ‘fellatio’ and the ‘garage car incident’”—from the record, arguing they were irrelevant, according to emails and legal records.
Gilliard left the agency in 2018. Her female supervisor was demoted and left the following year; the male supervisor received a title downgrade but got a pay raise and still works at the agency.
Allegations Of Racism
The FDIC continues to battle allegations of racism more than two decades after the agency paid more than $15 million in 2000 to settle charges of race discrimination and cronyism in promotions made by more than 3,000 Black employees in a class-action lawsuit.
As of 2022, minorities represent a quarter of executive managers, and women represent 35%, according to annual diversity reports.
In September 2018, an anonymous group of Black employees wrote to former Chairman McWilliams to express concerns about their treatment under Gruenberg, during his earlier stint as chairman.
“The culture at the FDIC for African-American employees is such that they are afraid to speak out about the issues they are facing for fear of repercussions,” they wrote, according to FDIC and congressional officials.
McWilliams told the Journal she was concerned by the letter and the agency crafted changes to address the concerns, including making ratings and promotion systems more merit-based.
Discrimination allegations persisted, and the union filed multiple grievances in the following years alleging discrimination against Black employees.
When Gruenberg returned to head the agency in 2022, two Republican senators wrote the FDIC to ensure the agency wouldn’t “revert back to a toxic workplace” under his leadership. They asked for records including complaints, investigations and settlements.
Gruenberg declined to provide the records, citing privilege and privacy considerations, and instead described his efforts to bolster diversity programs at the agency, including meeting with the leadership of an employee resource group for Black employees, according to the response reviewed by the Journal.’
The FDIC is involved in ongoing litigation over a decision in 2016 to reassign Segundo Pereira, the former director of the diversity office, to a senior adviser role in the FDIC’s Corporate University, which runs the examiner training program.
Pereira had faced multiple complaints of harassment and discrimination, according to legal documents.
Employees had complained to senior FDIC leaders and the agency’s inspector general that Pereira was discriminating against Black employees and creating a hostile work environment.
Among their complaints was that he had told a Black employee that slavery was “not all bad” around 2015.
Barbara Ryan, the chief operating officer and deputy to Gruenberg at the time, reassigned Pereira.
In a deposition, she said that when she learned an “unprecedented number” of complaints had been filed against Pereira, she “became very concerned about the reputation of the FDIC, should it become known externally that the FDIC’s most senior official in charge of diversity and inclusion was the subject of so many allegations of unfairness.”
Pereira denied making the slavery comment when internal investigators asked him about it, but said he might have noted the “remarkable” number of Confederate flags after a recent trip to South Carolina.
“Perhaps in the course of such a conversation, something similar came up,” investigators wrote.
In 2020, Pereira, who is Hispanic, sued the FDIC over his reassignment, accusing the agency of discriminating against him by demoting him to a “dead-end” position and calling the complaints about him frivolous and false. His lawyer declined to comment.
Ryan, who retired in 2018, didn’t respond to a request for comment.
Investigation Of Temper
President Biden last year nominated Gruenberg, now 70, to lead the agency for a second term. During the confirmation process, Republican investigators on the Senate Banking Committee asked employees about Gruenberg’s temper, current and former officials said.
One incident they examined was the 2008 meeting in which Gruenberg berated a senior female official for not clearing with him the timing of a coming senior management conference, which he couldn’t attend.
Bair, then the chairman, was told it was part of a pattern of behavior and tapped an external investigator to examine the incident, officials said.
The female official told the investigator that during the meeting she had grown concerned that Gruenberg might grab her notes out of her hands and rip them up, former officials said.
Bair spoke to Gruenberg about his conduct at the time and consultants also met with him to discuss his communication style, the officials said.
Investigators were also told that Gruenberg had broken multiple office phones in frustration.
On a bipartisan call during the confirmation, Republican investigators asked Gruenberg about the altercation and whether he had thrown phones. He denied acting inappropriately with the female employee or throwing phones.
Lacking confirmation of the allegations, the committee didn’t raise questions on the matter in Gruenberg’s public confirmation hearing. He was confirmed to a five-year term by a 45-39 vote, along with two Republicans tapped to serve on the regulator’s board.
A White House official said it supports the agency’s decision to conduct an investigation of the workplace culture and referred other questions to the FDIC.
A high percentage of employees have spent decades at the agency, creating little incentive for change, some employees say. The agency pays unusually well for a government organization.
The average tenure of FDIC employees is 25 years. A fifth of its workforce was eligible to retire last year—6 percentage points more than the government-wide percentage—and employees typically stay about eight years after that, according to an inspector general report. Officials joke that FDIC stands for “Found Dead in Chair.”
The leadership issues could weaken the agency’s ability to do its job, current and former employees said. In addition to examining banks’ ledgers, the regulator is also meant to scrutinize a bank’s management and personnel practices, as well as overseeing diversity and inclusion efforts.
“The financial market is moving at lightning speed. I don’t think the FDIC is on course to keep pace, because they’re not attracting and retaining the best and brightest, especially as it relates to younger employees,” said Candice Nonas, a former senior resolutions specialist at the FDIC. “They need to re-examine leaders who maintain the status quo.”