FDIC chair apologizes to staff after probe finds toxic workplace culture

FDIC Chair Martin Gruenberg apologized to his staff Tuesday after an investigation by a law firm confirmed a report that sexual misconduct, lewd behavior and retaliatory administrative practices were rampant at the federal banking regulator.

“To anyone who experienced sexual harassment or other misconduct at the FDIC, I again want to express how very sorry I am,” Gruenberg wrote. “I also want to apologize for any shortcomings on my part.”

Gruenberg said the investigation undertaken by law firm Cleary Gottlieb Steen & Hamilton presented a “sobering look” inside the FDIC and that he accepted its findings and recommendations. The report is expected to be released publicly Tuesday afternoon.

“Hundreds of our colleagues reported painful experiences of mistreatment and feelings of fear, anger, and sadness,” Gruenberg wrote to staff, pledging to implement the report’s recommendations.

Gruenberg’s note did not say that he would be resigning from the agency, where he has worked for nearly 20 years, despite a call from Republican lawmakers on the Senate Banking Committee in December for him to step down.

The Cleary Gottlieb probe was commissioned by the FDIC following a bombshell investigation by the Wall Street Journal, which painted a picture of the agency as a degenerate boys’ club rife with cases of sexual harassment and misogynistic behavior toward women.

More than 500 people at the FDIC reported cases of misconduct at the agency as detailed in the legal investigation, Reuters reported, citing two sources familiar with the matter. 

In addition to the misconduct complaints, Cleary Gottlieb also discovered numerous instances of bureaucratic retaliation against employees who reported their supervisors for bad behavior, according to Reuters.

The reinforcement of the Journal report by the legal investigation will put additional pressure for significant changes at the agency, a point that Gruenberg stressed in his note to employees.

“Making meaningful and sustained change to our workplace culture will not be easy,” he wrote.

The report has already renewed calls for Gruenberg’s resignation.

“It’s time for Chair Gruenberg to step aside. The independent report released today details his inexcusable behavior and makes clear new leadership is needed at the FDIC,” said Rep. Patrick McHenry (R-N.C.), chairman of the House Financial Services Committee, in a Tuesday statement.

“This report confirms the toxic workplace culture at the FDIC—which starts at the top—has led to entrenched and widespread misconduct at the agency. The FDIC must be held to the same standards of conduct it imposes on the entities it regulates. The agency’s culture must be overhauled.

Updated at 3:25 p.m. EDT