Four Sexual Harassment Firings at the FDIC Still Trail a 234-Page Cleary Gottlieb Report and Gruenberg’s Delayed Exit
The number that matters at the Federal Deposit Insurance Corporation is no longer the apology. It is the gap between a 234-page record and a short discipline log. On May 7, 2024, the agency published an independent review by the law firm Cleary Gottlieb Steen and Hamilton. Investigators had spent five months inside the bank regulator after Wall Street Journal reporting in 2023. More than 500 people, most of them current employees, described sexual harassment, discrimination, bullying, and retaliation. The firm wrote that the FDIC had failed, for far too many employees and for far too long, to provide a workplace safe from that conduct. The problems, it said, predated any single chairman. Management’s habit, witnesses told the lawyers, was to pay, promote, or move the person accused.
The Cleary report, posted on FDIC.gov, also described Chair Martin Gruenberg’s reputation for losing his temper and questioned whether he had the “moral authority” to lead a cultural overhaul. Special Committee co-chair Jonathan McKernan called the findings “the urgent imperative of a culture transformation.” Gruenberg, a Democrat who had spent nearly two decades at the agency, called the portrait sobering, apologized to “hundreds of employees who reported painful experiences of mistreatment,” and accepted responsibility. Roughly one in ten employees had complained of sexual harassment, discrimination, or other interpersonal misconduct. The agency’s own older tally made the pattern numerical. Of 92 harassment complaints handled through the anti-harassment program from 2015 through 2023, not one produced a removal, a demotion, or a pay cut. Two produced suspensions. Two produced letters of reprimand. Twelve ended in counseling, a warning, or training. A regulator that seizes failed banks had, on its own books, almost never seized a harasser’s job.
The Chairman Left on a Political Clock
Congress did not wait for a task force. House Oversight leaders James Comer, Lisa McClain, and Andy Biggs asked why the White House had not already removed Gruenberg. On May 20, 2024, hours after Senate Banking Chair Sherrod Brown, a Democrat, called for new leadership, Gruenberg said he would resign only after the Senate confirmed a successor. Republicans called the condition a stall. If he had walked out that week, Republican Vice Chair Travis Hill would have become acting chairman, splitting a board that Democrats wanted aligned for tougher capital rules on the largest banks. House Financial Services leaders labeled the offer too little, too late. Sen. John Kennedy of Louisiana told President Biden, from the Senate floor, to fire Gruenberg rather than wait on a calendar. President Biden nominated Commodity Futures Trading Commission member Christy Goldsmith Romero. The Senate did not confirm her. Gruenberg retired effective January 19, 2025, one day before President Trump’s inauguration. Hill became acting chairman the next day.
Hill was sworn as the 23rd FDIC chairman on January 2, 2026, for a five-year term, after serving as vice chairman since January 2023. The capital rewrite Democrats had hoped to lock in never cleared the board. What did clear, on paper, was a new structure. In June 2024 the agency created an Office of Professional Conduct to take in harassment, interpersonal misconduct, and retaliation complaints, and a separate Office of Equal Employment Opportunity for discrimination cases. Both were designed to report in a way the old program had not. A January 6, 2026, equal-employment statement over Hill’s signature pointed staff to that office and to the inspector general’s hotline. The FDIC’s public culture page says a new case-management system was expected in 2026. Structure is the part an agency can photograph. Accountability is the part that requires names leaving the building.
Kennedy, who had threatened to hold Hill’s nomination, released the agency’s culture-transformation report to his office dated November 5, 2025. The numbers in that memo are broader than sexual harassment, and that breadth is the trick. For fiscal 2025, the FDIC said 338 subjects were involved in closed misconduct cases and 112 had allegations substantiated. Discipline ranged from counseling to removal. Fourteen people were removed. Twelve resigned or retired in lieu of removal. The agency’s summary line, repeated in later oversight memos, was that 26 employees had left specifically because of substantiated misconduct, and that no current executive with a substantiated finding remained. A workforce realignment, separate from those cases, cut more than 1,300 positions. Hill told the Senate Banking Committee in October 2025 that reform would continue. Democrats noted that the inspector general had flagged harassment as far back as 2020, during Jelena McWilliams’s chairmanship, when Hill was already a senior official. Republicans answered that Gruenberg’s temper and the Cleary findings landed on his watch. Neither party published a list of supervisors protected by a transfer or a quiet retirement.
Eight Harassment Cases Are Not Five Hundred Interviews
The harassment-specific count arrived when reporters stopped accepting the blended total. On July 22, 2026, Reuters reported, from agency officials and records, that since January 2025 the FDIC had fired four employees for sexual harassment, suspended two, and seen two more resign ahead of dismissal. Eight cases in about 18 months, including a senior manager. A disciplinary list the Office of Professional Conduct produced under the Freedom of Information Act showed three firings and a 60-day suspension attributable to that office, with other actions beginning before the office existed. The FDIC said it was deeply committed to individual accountability. Commitment is not a denominator. Cleary’s file was built on more than 500 interviews. The public firing list for sexual harassment, a year and a half into the new chairman’s acting-and-confirmed tenure, was four.
That gap is not a claim that every interview described a fireable offense. Many accounts were about a culture of mockery, fear, and retaliation that never became a charge with a name attached. The Cleary lawyers wrote that historical aversion to litigation risk was one reason discipline stalled: seasoned managers would rather move a problem than defend a removal. Hill’s November 2025 responses to Senate questions said the agency had adopted stricter standards for settling complaints and had told managers that accountability comes before fear of a lawsuit. The Office of Inspector General, in a July 2025 report, examined allegations involving Gruenberg and four top executives. None of those five were still at the agency when the report came out. Departures of chairmen are visible. The hallway version of accountability is a FOIA table with eight rows.
The FDIC is not a campus human-resources office. It decides which banks get a Matter Requiring Attention, which depositors get paid when an institution fails, and which holding companies sit across the table from examiners who are supposed to be unbuyable. A workplace that spent years treating harassment complaints as a transfer problem is a workplace that also decides who gets a pass on a balance sheet. Members of Congress asked that question in the hearing that followed the Cleary report. Gruenberg sat for it. Hill inherited both the cleanup and the suspicion that culture change had been paced to an election and a confirmation vote. From the May 7, 2024, report to Gruenberg’s last day was more than eight months. From the first Journal stories in 2023 to the first wave of harassment firings was longer. The Student Residence Center, where examiners train, drew its own reforms: a code of conduct, more security, tighter reporting. Training housing was never the whole scandal. It was the place the scandal was hardest to pretend was a rumor.
The AEGIS Alliance files institutional misconduct on the U.S. News desk and in crime news and politics coverage, including a Lee County sheriff’s office accused of fabricating evidence and the way Boeing workers marked inspections complete without doing the work. An apology from a chairman is not a culture. A new office is not a culture. Twenty-six separations for misconduct of every kind is a real number, and it is not the same number as four firings for sexual harassment. The Cleary report asked the FDIC to change the cost of being the person who gets away with it. Eight closed harassment cases are the first cost the public can count. They are not the end of a file built on 500 conversations and nine years in which almost nobody was removed.
