FDIC Chairman Martin Gruenberg is facing a firestorm following reports of a toxic workplace at the agency, with a growing number of GOP lawmakers calling for his resignation.
Republicans are ramping up pressure on Gruenberg in the wake of a Wall Street Journal report that documented sexual misconduct by FDIC employees and other incidents that contributed to a hostile work environment, with House Financial Services Chairman Patrick McHenry vowing to conduct an investigation. Gruenberg has served as the head of the banking regulator on and off for the past 12 years.
Sen. Thom Tillis (R-N.C.), a member of the Banking Committee, said in a statement Thursday that “it’s clear there was a major leadership failure at the top that allowed this behaviour to go unchecked.”
“Marty Gruenberg should step down,” he added.
Sen. John Kennedy (R-La.), who also sits on the panel, sent Gruenberg a letter urging the same.
“As a result of these troubling reports and your apparent unwillingness to address them, I am requesting your resignation so that a new Chairman can restore the professional culture at the FDIC that the American people expect,” Kennedy wrote.
By Thursday afternoon, some Democrats were beginning to weigh in, though they stopped short of calling for Gruenberg’s resignation. Senate Banking Chairman Sherrod Brown of Ohio called on the FDIC’s inspector general to “conduct an independent and thorough investigation into the workplace culture at the agency.
“The reports are deeply troubling,” Brown said in a statement.
The Journal reported on Monday that the agency has been plagued for years by a culture of sexism and sexual harassment that has led female employees to quit. The newspaper published a story late Wednesday citing current and former FDIC officials who said Gruenberg and top deputies were involved in decisions about alleged sexism and racial discrimination where the agency didn’t take a hard line. It also reported that Gruenberg was known to have an “explosive temper”.
The FDIC then cancelled an open meeting of its board of directors, saying members would instead submit their votes to finalise a new rule in writing. Shortly afterwards, the GOP members of the board issued a statement saying the news articles had undermined public confidence in the agency.
“This has been a difficult week for the FDIC,” Vice Chairman Travis Hill and board member Jonathan McKernan said in the statement. “Restoring confidence in the work environment at the FDIC will be a challenge.”
The top Republican on the Senate Banking Committee, Tim Scott (R-S.C.), wrote in a statement that Gruenberg “has failed to lead and address employee concerns over the years.
“As such, he should seriously consider whether he has the leadership the FDIC needs at this time to restore confidence in the agency,” he said.
Lawmakers had pressed Gruenberg on the allegations in oversight hearings on Tuesday and Wednesday.
Gruenberg said harassment and discrimination were “unacceptable” and told lawmakers that an independent firm would conduct a “top-to-bottom assessment” of the agency. He said he was unaware of the allegations of workplace problems at the agency before the Journal’s report.
“It’s quite clear that we’ve had employees at the FDIC who have been subjected to horrific experiences that are simply unacceptable and cannot be tolerated,” the FDIC chief testified. “It’s really going to be incumbent upon the agency to take whatever steps are necessary to come to grips with this and deal with it effectively.”
In their statement, the FDIC’s GOP members said Gruenberg and the general counsel, who is also implicated in the reports, should completely recuse themselves from the independent review and that the board, not management, should lead the investigation.
The White House said on Thursday it supported the investigation.
“Any reports of sexual harassment and discrimination are unacceptable, and we support the FDIC’s decision to conduct a thorough investigation,” said an official who asked not to be named. “I would refer you to the FDIC for anything further.”
Rep. Bill Foster (D-Ill.) also said these are “serious allegations that need to be investigated, and those responsible should be held accountable.”
McHenry, in a separate statement, stopped short of calling for Gruenberg’s resignation, but said he “should never have been reappointed or confirmed in the first place”. McHenry said his committee would conduct a “rigorous investigation,” including hearings and transcribed interviews.
“Under his leadership, the FDIC is at best preoccupied with this sideshow and at worst compromised,” McHenry said in a statement. “Chairman Gruenberg clearly bears responsibility because these allegations occurred during his tenure as a board member or chairman. There is no excuse for this alleged behaviour, which is why the [FDIC] Inspector General must brief the Committee as soon as possible.”
The agency’s watchdog found in 2020 that the FDIC did not have an incentive system in place to encourage employees and managers to “create a culture in which harassment is not tolerated” and to report and investigate complaints.
Gruenberg was forced to backtrack on Wednesday after telling the House Financial Services Committee that he himself had never been investigated for workplace misconduct.
“You asked me a question earlier,” Gruenberg told McHenry, reportedly after Journal reporters asked the agency for comment. “To clarify, I was interviewed in 2008 as part of a review that was done in response to a concern raised by an employee, and I’m not aware of anything that came out of that review.”
Representative Bill Huizenga criticised the official for “perjuring himself” – although he stopped short of calling for his resignation.
“It is clear that there has been a failure of leadership,” the Michigan Republican said in a statement. “I fully expect the FDIC and its chairman to cooperate with our investigation to ensure the safety and soundness of our financial system.”
An FDIC spokesman said the board would proceed with a vote scheduled for Thursday’s meeting on whether to approve a final rule that would charge big banks an additional fee to shore up its deposit insurance fund, following losses at two regional lenders earlier this year.
