House committee launches investigation into FDIC workplace allegations

The House Financial Services Committee plans to open an investigation into the Federal Deposit Insurance Corporation (FDIC) in response to recent reports that the banking regulator fostered a toxic work environment plagued by sexual harassment and misogyny.

The investigation will focus on the allegations of “widespread and entrenched misconduct and toxic work environment,” as well as the potential impact on “the safety and soundness of the banking system,” the top Republican members on the panel announced on Friday.

In a letter to FDIC Chairman Martin Gruenberg, Financial Services Chairman Patrick McHenry (R-N.C.) and Subcommittee Chairmen Bill Huizenga (R-Mich.) and Andy Barr (R-Ky.) expressed concerns about the agency’s ability to tackle the reported workplace problems.

“Because ‘the agency’s problems stretch back more than a decade and have persisted through changes in leadership, administrations and internal investigations,’ we are concerned the FDIC, under your leadership, lacks the ability to address the problems,” the lawmakers said.

“Our concern is underscored by your nearly 20-year tenure in all aspects of leadership and management at the FDIC, including serving twice as Chairman,” they added. “It has failed to instill the confidence the public needs to know their banking system is and will be safe and secure in the future.”

A pair of reports from the Wall Street Journal this week detailed employee complaints about a sexualized, boys club culture that drove women to leave the agency and raised concerns about Gruenberg’s management.

The FDIC chair appeared before both the Senate Banking, Housing and Urban Affairs Committee and the House Financial Services Committee this week for unrelated oversight hearings. However, he faced a grilling from lawmakers on both sides of the aisle over the recent revelations.

After initially saying at Wednesday’s House hearing that he had never been investigated for inappropriate conduct during his time at the FDIC, Gruenberg corrected his testimony to note that he had previously been investigated in 2008.

“Chairman Gruenberg, the viability of your leadership is in question,” McHenry, Huizenga and Barr said in Friday’s letter. “Notwithstanding the toxic environment over which you presided in some leadership capacity over the last 18 years, your conflicting testimony in this week’s hearing before the Committee was alarming.”

The FDIC was thrust into the spotlight earlier this year after a series of high-profile bank failures prompted questions about the agency’s oversight capabilities. In an April report on the failure of Signature Bank, the FDIC noted that staffing challenges had impacted the quality and timeliness of its supervision of the bank.

The trio of Republican lawmakers highlighted the report on Friday, noting that it “did not consider how the longstanding toxic FDIC culture inhibits employee retention.”

“By ignoring or choosing to remain silent about workplace misconduct at the FDIC, your leadership may have contributed to the financial instability and threats to financial security of Americans that were observed in March,” the lawmakers added.