Reports of the conduct at the Federal Deposit Insurance Corporation (FDIC) read like a screenplay for “Animal House,” the 1980s John Belushi movie about campus debauchery at the fictional Faber College. “Animal House” is funny as hell. What’s not funny is finding out that some of the same behavior — and worse — may have been happening for years at one of the agencies charged with supervising America’s banking system.
According to employees who spoke with the Wall Street Journal, the FDIC functioned as a real-life Faber College where excessive drinking, public urination and sexual harassment were common but professional consequences for this bad behavior were rare. Employees described booze-filled training conferences where trainees regularly “puked off the roof” or drank so much they wound up in the hospital. (There’s no evidence of FDIC toga parties — yet.)
Agency road trips sound worse than the training sessions. One woman said a male co-worker brought her to a strip club during a work trip. Another received nude photos from her male colleague staying in the same hotel. Twenty other women reported similar stories of “wild west” misconduct on the road.
Since joining the FDIC’s board in 2005, Chairman Martin Gruenberg has had a front-row seat to it all. He was chair or acting chair of the FDIC for nine of the past 18 years while his agency apparently tolerated a culture of debauchery and harassment. Gruenberg either knew about the abuse women faced at the FDIC and failed to address it or was negligently blind to it.
Either way, Gruenberg should resign.
New reports of misconduct add color to a problem that the FDIC knew existed for years. In 2020, the agency’s inspector general published a report on sexual harassment that revealed that at least 191 FDIC employees experienced sexual harassment between January 2015 and April 2019. Thirty-eight percent of these employees who experienced sexual harassment did not report it for fear of retaliation. Those who did report the harassment waited upwards of six months for the FDIC to investigate their claims.
At a recent hearing, Gruenberg claimed he first heard of widespread sexual harassment at the FDIC from newspaper reports, seemingly implying that he somehow missed the inspector general’s findings while he sat on the board. He told me it was, by the way, the chair’s responsibility to address the problem in 2020 — not his.
If Gruenberg believes the chair bears responsibility, he should look in the mirror.
Gruenberg was chair in 2016 when law enforcement charged an examiner-in-training who was found passed out behind the wheel of his car. He was chair in 2014 when police arrested an examiner for public intoxication after he threw an FDIC conference party so wild that other employees told police they felt they were being held hostage. Gruenberg was also chair when the FDIC declined to fire these employees.
In contrast, Gruenberg admitted that his predecessor, Chair Jelena McWilliams, worked to implement the inspector general’s 15 recommendations for improving the agency’s response to sexual harassment. After her term was cut short and Gruenberg returned as chair, it became his job to restore professionalism at the FDIC. He didn’t.
Instead, Gruenberg encouraged misconduct by promoting a manager whose abusive outbursts bled the agency of $100,000 in settlement costs. Thanks to Gruenberg, that manager is now the agency’s general counsel.
The disturbing claims reach beyond rank-and-file employees. Gruenberg himself faced allegations of misconduct — something he conveniently forgot during his testimony before the U.S. House of Representatives. He eventually corrected the record after consulting with his staff.
The FDIC’s employees deserve accountability, and I support a thorough investigation. I question whether the agency should be in charge of its own investigation. I’d feel better if the FBI investigated. Nonetheless, we don’t need to wait for those investigations to conclude that the FDIC, America’s banks and America’s taxpayers would be on better footing without Gruenberg. He admitted before the Senate that he did little to rectify the harassment allegations as chair. Months of investigations won’t change that.
If Gruenberg wants to show his employees and the American people—for the first time in his nearly two decades of leadership—that he is doing something to end abuse, he should resign and allow a real leader to restore professionalism to the FDIC. Right now, it’s #MeToo—except for the connected at the FDIC.
John Kennedy is the junior senator from Louisiana and is a member of the Senate Banking Committee.