Probe finds misogynistic ‘boys club’ culture at US bank regulator

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The Federal Deposit Insurance Corporation has a “misogynistic” and “insular” workplace whose chair may not be well suited to lead needed reforms, says a new report commissioned over complaints about widespread sexual harassment inside the US banking regulator.

The FDIC, which has almost 6,000 staff, commissioned the independent report late last year in response to press accounts of harassment and discrimination against female employees.

The report released on Tuesday described an organisation with deeply rooted problems, calling it a “good ol’ boys club where favouritism is common, wagons are circled around managers, and senior executives with well-known reputations for pursuing romantic relations with subordinates enjoy long careers without any apparent consequence”.

Martin Gruenberg, who has served at the agency for most of the past two decades, including 10 out of the past 13 years as chair, came in for criticism as an angry boss who must change his own behaviour in order to fix the agency.

As recently as 2023, the report said, FDIC employees had experienced Gruenberg “lose his temper and express anger in ways that they felt were offensive and inappropriate”.

The subjects of the ire “left these meetings feeling verbally attacked personally and in an unfair manner”.

The report said that the given the duration of Gruenberg’s time at the top, as well as allegations about his temper “may hinder his ability to establish trust and confidence in leading meaningful culture change, and so too may his apparent inability or unwillingness to recognise how others experience certain difficult interactions with him.”

The report added: “For these challenges to be overcome, there must at least be a genuine and sustained commitment to lead a culture change, accompanied by a recognition and acknowledgment that such change is necessary because of failings of the past, including his own.”

A person close to the FDIC’s management, said the board has not held discussions as to whether Gruenberg should step down. The person was unaware of any dismissals tied to the report.

Some lawmakers renewed calls for the chair to quit on Tuesday. 

Patrick McHenry, chair of the House Financial Services Committee, said that it was time for Gruenberg to step aside. “The independent report released today details his inexcusable behaviour and makes clear new leadership is needed at the FDIC,” he said.

Other Republicans on the committee followed suit, along with Democrat Bill Foster, who said on social media site X that he was “appalled and deeply disturbed” by the revelations in the report and that it was time for the chair to resign.

However, Sherrod Brown, Democratic chair of the influential Senate Committee on Banking, stopped short of calling for Gruenberg to go, saying the chair “must accept responsibility and must immediately work to make fundamental changes to the agency and its culture”.

The report, produced by law firm Cleary Gottlieb, lifts the lid on widespread reports of sexual and racial harassment at the regulator and detailed fears of retribution among staffers who spoke out. The report was based on conversations with more than 500 current and former employees.

Gruenberg apologised to staff in an internal memo on Tuesday, describing the report as “sobering”.

He said the agency would take the report’s recommendations, including moving forward on appointing an internal person to lead the culture transition, and an outside auditor of progress.

“Hundreds of our colleagues reported painful experiences of mistreatment and feelings of fear, anger, and sadness,” Gruenberg wrote. “I accept the findings and recommendations of this report and thank the special review committee for their exhaustive work.”

He flagged the FDIC had taken action to begin addressing some of the complaints raised — providing more support to victims, in-person training for all of its employees, strengthening procedures for reporting, and improving accountability for anyone who is found to engage in misconduct.

“We will spare no effort to create a workplace where every employee feels safe, valued, and respected,” the chair said.