FDIC Launches Committee Investigating Alleged Boys’ Club Culture Of Sexual Harassment, Partying
The Federal Deposit Insurance Corporation (FDIC) has taken action by forming a special committee to investigate allegations of widespread sexual harassment, misogyny, and a partying culture within the bank regulator. This move comes in response to a recent exposé published by the Wall Street Journal, which shed light on explicit allegations made by over 100 current and former FDIC employees.
The committee will be chaired by acting Comptroller of the Currency Michael Hsu, a Democrat, and board member Jonathan McKernan, a Republican. The FDIC board has approved the committee’s formation through a resolution that ensures its independence. As part of this resolution, FDIC Chairman Martin Gruenberg, who has been previously investigated for allegations of angry outbursts directed at employees, will not be involved in the review process. Additionally, the outside law firm hired by the agency to conduct an internal probe, BakerHostetler, will report its findings directly to the committee.
The Wall Street Journal report detailed a pervasive culture of misconduct, including misogyny, sexual harassment, excessive drinking, and partying at the FDIC. The report showcased testimonies from more than 20 women who quit their jobs due to these disturbing conditions. Many of the female employees mentioned being passed over for promotions and facing penalties if they did not engage in social activities with their male colleagues. The strict travel schedule required by their positions, which involved visiting banks across the country, facilitated the inappropriate behavior.
One former employee, Lauren Lemmer, shared her experience of receiving an unsolicited naked photo from a male colleague and being followed back to her hotel room by another male trainee in Dallas. She also revealed that her supervisor and other male employees would frequently visit a strip club together. Furthermore, the FDIC’s hotel in Washington, D.C., was described as a party destination for out-of-town trainees, where vomiting off the 11-story roof was considered a rite of passage. The agency’s lax approach to investigating complaints of sexual harassment, as highlighted in a 2020 FDIC inspector general report obtained by the Journal, further fueled the toxic environment.
The Journal’s report led to calls for Martin Gruenberg’s resignation, primarily from Republican lawmakers critical of his bank regulations. However, Democratic lawmakers, including Senator Sherrod Brown from Ohio and Senator Elizabeth Warren from Massachusetts, demanded an independent investigation into the allegations. Gruenberg himself has faced allegations of misconduct in the past, with accusations of losing his temper with employees. While he acknowledged the internal review of his conduct during a recent hearing, he claimed to be unaware of any outcomes resulting from that review.
Moving forward, the House Financial Services Committee has also announced its plans to investigate the FDIC. In a letter to Gruenberg, the committee expressed its intention to examine not only the alleged misconduct and toxic work environment but also whether these issues have compromised the safety and soundness of the banking system. Additionally, the committee will scrutinize Gruenberg’s own conduct during this process.
Frequently Asked Questions
What is the FDIC?
The Federal Deposit Insurance Corporation (FDIC) is an independent government agency responsible for protecting depositors and maintaining stability in the U.S. banking system.
What allegations have been made against the FDIC?
The FDIC has been accused of fostering a culture of sexual harassment, misogyny, and excessive partying. Over 100 current and former employees, including more than 20 women, have come forward to share their experiences of misconduct at the agency.
Who will be leading the committee’s investigation?
The committee will be chaired by acting Comptroller of the Currency Michael Hsu and board member Jonathan McKernan. Their leadership aims to ensure a thorough and impartial investigation.
Will the FDIC Chairman be involved in the review?
No, FDIC Chairman Martin Gruenberg will not be participating in the investigation due to previous allegations of misconduct and anger-directed outbursts toward employees.
What actions will be taken to maintain the committee’s independence?
To maintain independence, the committee has established guardrails prohibiting Chairman Gruenberg from participating and requiring the external law firm conducting the internal probe, BakerHostetler, to report its findings directly to the committee.
The formation of this special committee is a significant step towards addressing the allegations of sexual harassment and a toxic work culture at the FDIC. As the investigation progresses, it is crucial to ensure transparency, accountability, and an environment that fosters respect and equality within the agency.
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