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

A damning independent report, commissioned by the Federal Deposit Insurance Corporation (FDIC) itself, revealed a pervasive culture of sexual harassment and misconduct within the agency. The report, compiled by law firm Cleary Gottlieb after a five-month investigation, stemmed from allegations exposed last year by the Wall Street Journal.

Over 500 individuals, primarily current FDIC employees, came forward with disturbing experiences, according to sources familiar with the report. Furthermore, the investigation found extensive evidence of retaliation against those who dared to speak up against supervisor misconduct, with little to no action taken to address these retaliatory actions.

Fearing repercussions, the sources requested anonymity until the report’s official release. In a response to his staff, FDIC Chair Martin Gruenberg, a veteran of nearly two decades within the agency, acknowledged the report’s “sobering” portrayal of the organization. He expressed his deepest apologies for the “hundreds of employees who “reported painful experiences of mistreatment and feelings of fear, anger, and sadness.” Gruenberg, a Democrat currently serving his second term as Chair, took full responsibility for the agency’s shortcomings.

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

The investigation was triggered by the Wall Street Journal’s 2023 exposé, which alleged years of unchecked sexual harassment and other misconduct within the FDIC, further claiming Gruenberg’s personal involvement in decisions that shielded perpetrators from punishment. This report is likely to reignite calls for Gruenberg’s resignation, particularly from Republicans who previously demanded his departure.

President Biden appointed Gruenberg in 2022. His potential exit would complicate the administration’s efforts to implement stricter financial regulations, including a bank capital requirement proposal facing resistance from both Republicans and industry representatives. Should Gruenberg resign or be removed, the agency’s bylaws dictate that Republican Vice Chair Travis Hill would assume leadership, resulting in a board evenly split between the two parties.