Top banking regulator Martin Gruenberg is facing pressure to resign after a savage report about the Federal Deposit Insurance Corporation’s (FDIC) licentious working culture confirmed long-standing findings of sexual harassment plaguing the agency.
Top Republicans on congressional financial committees and at least one Democratic lawmaker have issued calls for Gruenberg’s resignation following an investigation by law firm Cleary Gottlieb Steen & Hamilton.
The law firm documented numerous instances of sexual harassment as well as a “widespread fear” among FDIC employees of reporting bad behavior to their bosses.
House Financial Services Committee Chair Patrick McHenry (R-N.C.) said in a Wednesday statement that “it’s time for Chair Gruenberg to step aside.”
“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,” he said.
Rep. Bill Foster (D-Ill.), ranking member of the Financial Services subcommittee on financial institutions, also called for Gruenberg to step down.
“I am appalled and deeply disturbed by the details of widespread sexual harassment and discrimination at the FDIC outlined in the report released today,” he said in a statement.
“Sweeping changes must be made to mend the toxic work environment that has run rampant for far too long, and that starts with a change of leadership.”
Senate Banking Committee ranking member Tim Scott (R-S.C.) reprised his call for Gruenberg’s resignation, first made in December in response to an investigation by The Wall Street Journal that prompted the Cleary Gottlieb probe.
“Given the chairman’s nearly two decades in leadership at the FDIC, the findings of this report cannot be separated from his actions,” he said.
Other top Democrats stopped short of saying that Gruenberg had to go.
Senate Banking Committee Chair Sherrod Brown (D-Ohio) said that Gruenberg “must immediately work to make fundamental changes to the agency and its culture,” but did not call for new leadership at the agency.
For years sexual harassment has been a known problem at the FDIC.
In 2020, the FDIC’s inspector general issued a report showing that sexual harassment was almost exactly as common at the agency 10 years ago as it is today.
About 8 percent of respondents to a 2019 survey conducted at the FDIC said they’d experienced sexual harassment, while 9 percent reported sexual harassment between 2014 and 2016.
The most recent report from Cleary Gottlieb recorded more than 500 individuals reporting sexual harassment out of a workforce of 5,280 full-time workers, or about 9 percent.
“Clearly the problems [at the FDIC] have been festering for a long time over the terms of many chairs,” Aaron Klein, a former Senate Banking Committee economist, wrote on social media Tuesday.
“I guess the nature of Washington is whoever is in the seat when the story breaks bears the brunt but folks should appreciate the timing of when many of these instances occurred.”
The FDIC delivered an action plan in December following The Wall Street Journal investigation aimed at correcting the agency’s culture.
In a note to FDIC staff sent Tuesday, Gruenberg said the action plan will improve “accountability for anyone who is found to engage in misconduct, including separation from the agency.”
Gruenberg has served as FDIC chair since 2023 but has been a top leader at the agency since joining the board in 2005. He has served various stints as FDIC chair, vice chair and acting chair during his nearly two decades at the agency.
Gruenberg’s current position and lengthy tenure at the FDIC have made him the focus of the outrage over its working culture.
“While we do not find Chairman Gruenberg’s conduct to be a root cause of sexual harassment and discrimination in the agency or the long-standing workplace culture issues identified in our review, we do recognize that, as a number of FDIC employees put it in talking about Chairman Gruenberg, culture ‘starts at the top,’” investigators at Clearly Gottlieb wrote.
But some supporters of Gruenberg’s regulatory agenda have accused the Cleary Gottlieb report of partisanship for failing to hold former FDIC Chair Jelena McWilliams, who led the agency when the inspector general (IG) report was released in 2020, to greater account.
“Former Republican Chair McWilliams and her senior leadership team should have and could have ended the workplace misconduct beginning in May 2020 when they received the draft IG Report, and certainly no later than July of 2020 when the IG’s Report was final. However, that did not happen,” the Better Markets regulatory advocacy group wrote in a Wednesday news release.
McWilliams, who was appointed by former President Trump and led the agency when the inspector general’s report was released, did not return a message from The Hill left with her office.
Former FDIC Chair Sheila Bair, who was appointed by former President George W. Bush, did not respond to an email request left with the Systemic Risk Council, a group that lists her as a senior adviser.