US FDIC launches review of alleged sexual harassment, misconduct

[November 22, 2023]  By Douglas Gillison
 
(Reuters) -A special committee will oversee a review of alleged toxic workplace culture and sexual harassment at the U.S. Federal Deposit Insurance Corp but the agency's chief will not be involved, the top banking regulator announced on Tuesday, as it faced a reckoning following reports in the Wall Street Journal. 

The Federal Deposit Insurance Corp (FDIC) logo is seen at the FDIC headquarters as Chairman Sheila Bair announces the bank and thrift industry earnings for the fourth quarter 2010, in Washington, February 23, 2011.REUTERS/Jason Reed/File Photo

FDIC Chair Martin Gruenberg was also cited in the reports as having earned a reputation for bullying and leniency in cases of misconduct.

"The Board supports taking all actions necessary to identify and address the root cause of the problem and to promote accountability," the FDIC's board of directors said in a statement.

Citing interviews with more than 20 women who had quit, the Wall Street Journal reported last week that the agency had failed to eradicate widespread harassment and misogynist behavior among staff.

The allegations have rocked the agency and prompted Republican lawmakers to call for Gruenberg to resign. Gruenberg has expressed dismay and vowed to address the problems as a top priority.

The calls for Gruenberg's ouster and his sidelining from the special committee underscore the challenge to his authority at the FDIC, one of three key agencies in a regulatory reform effort that has drawn stiff opposition from industry.

The special committee will be co-chaired by two FDIC board members, acting Comptroller of the Currency Michael Hsu, a Democrat, and board member Jonathan McKernan, a Republican.

Last week, McKernan and FDIC Vice Chair Travis Hill, also a Republican, had demanded that Gruenberg recuse himself from oversight of any review. In a statement on Tuesday, Hill said the board had unanimously approved measures to ensure the review's independence.

In a sign of the turmoil that has beset the agency since the Journal expose, the demands for recusal coincided with a scheduled board meeting that was abruptly canceled minutes after it had been due to begin.

The board resolution approving the review includes provisions "that restrict the ability of FDIC management and FDIC Board members not on the Special Committee to engage with or influence the review," Hill said, noting that his support of the decision had depended on that condition.

In a statement, Sherrod Brown, a Democrat and chair of the Senate Banking Committee who last week called on FDIC inspector general's office to investigate, said the FDIC board had taken "appropriate steps" to ensure its own review would proceed independently.

(Reporting by Douglas Gillison; Editing by Lisa Shumaker, Marguerita Choy and Leslie Adler)

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