200-page report offers ‘sobering look’ inside toxic workplace at the government agency that regulates bankers, sources say

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A probe into the Federal Deposit Insurance Corp.’s workplace found credible allegations of a toxic environment for bank examiners and that the agency’s culture needs an overhaul, according to four people with direct knowledge of the findings.

The report by law firm Cleary Gottlieb Steen & Hamilton says the FDIC needs a “structural and cultural transformation” to restore confidence in its examiner ranks and agency-wide, said three of the people, who asked not to be identified discussing an unpublished review. It stretches more than 200 pages and includes accounts of problematic behavior by FDIC employees.

The findings also recommend changes to the agency’s performance review process, workplace conduct metrics, and that an internal monitor be installed to oversee the effort, said the people. The investigation was prompted by a Wall Street Journal article in November that reported female bank examiners had left the FDIC because of its “sexualized, boys’ club environment.” 

The review found the article’s description of the workplace culture to be credible, said the people. The findings also show employee satisfaction scores were dragged down by cultural issues in recent years, they added.

‘Sobering look’

In a statement to agency staff obtained by Bloomberg News, FDIC Chairman Martin Gruenberg said Tuesday that the findings present a “sobering look inside our workplace” and include details from hundreds of workers about “painful experiences of mistreatment and feelings of fear, anger, and sadness.” 

“We will spare no effort to create a workplace where every employee feels safe, valued, and respected,” said Gruenberg, adding that the agency was implementing a plan to follow the report’s recommendations. He said the report would be released later on Tuesday.

The Journal article prompted calls from some prominent Republican lawmakers for Gruenberg, who was appointed by President Joe Biden, to resign. At the time, Sherrod Brown, an Ohio Democrat who leads the Senate Banking Committee, called for an investigation by the agency’s inspector general.  

The FDIC’s workplace issues are adding to political pressure that Gruenberg is facing from Wall Street and some lawmakers over a plan by his agency, the Federal Reserve and the Office of the Comptroller of the Currency to require banks to hold more capital.

Gruenberg apology

The law firm’s investigation’s scope was not meant to recommend discipline or call for the removal of agency officials, said the people familiar with the findings. Gruenberg was interviewed as part of the review. 

The probe didn’t conclude that Gruenberg failed to act on the allegations reported by the Journal, said the people. However, it does cite examples of him losing his temper with staff in unrelated instances and questions whether he is the best person to lead the workplace culture changes at the agency, they added.

In his statement, Gruenberg apologized to staff for “any shortcomings on my part.”

“To anyone who experienced sexual harassment or other misconduct at the FDIC, I again want to express how very sorry I am,” Gruenberg said. “As chairman, I am ultimately responsible for everything that happens at our agency, including our workplace culture.” 

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