FDIC probe uncovers ‘widespread’ sexual misconduct occurred for years at bank regulator

The Federal Deposit Insurance Corporation (FDIC) itself commissioned a damning independent report that exposed a widespread culture of sexual harassment and misconduct within the organization. Following a five-month investigation, the law firm Cleary Gottlieb produced the report, which was based on accusations made public by the Wall Street Journal in the previous year.

Sources familiar with the report claim that over 500 people, mostly current FDIC employees, came forward with troubling experiences. In addition, there was little to no action taken to address the widespread evidence of retaliation against those who dared to report supervisor misconduct, according to the investigation.

The sources asked to remain anonymous until the report was formally released out of fear of consequences. FDIC Chair Martin Gruenberg, who has worked for the agency for almost 20 years, responded to his staff by praising the “sobering” picture of the organization provided by the report. Regarding the “hundreds of employees who reported painful experiences of mistreatment and feelings of fear, anger, and sadness,” he offered his sincere apologies. Currently in his second term as Chair, Democrat Gruenberg accepted full responsibility for the agency’s missteps.

“I again want to express how very sorry I am,” Gruenberg added.

The Wall Street Journal’s 2023 exposé, which claimed years of unrestrained sexual harassment and other misbehavior within the FDIC and further implicated Gruenberg personally in choices that absolved offenders of punishment, set off the investigation. Gruenberg’s resignation is expected to come under renewed pressure after reading this report, especially from Republicans who have previously called for it.

Gruenberg was appointed by President Biden in 2022. His possible departure would make it more difficult for the administration to enact tougher financial regulations, such as a proposal to require banks to have more capital, which is opposed by Republicans and business leaders alike. The agency’s bylaws state that Republican Vice Chair Travis Hill would take over as chairman in the event that Gruenberg resigned or was removed, leaving the board evenly divided between the two parties.