The FDIC is a 'boys club' where some senior execs pursued romantic relationships with their staff, says new report

• The Federal Deposit Insurance Corporation, or FDIC, has a "patriarchal" culture, according to an independent report.
• The bank regulator took no action on dozens of harassment complaints and moved wrongdoers around.
• Investigators raised doubts about the FDIC chairman's ability to lead a cultural transformation.

A key US bank regulator has a "patriarchal" and "insular" culture and is led by a chairman with a reputation for a strong temper, according to an independent report released on Tuesday.

The 234-page summary of the months-long investigation, led by the external law firm Cleary Gottlieb Steen & Hamilton, highlighted longstanding and recent issues at the Federal Deposit Insurance Corporation, or FDIC. The report said the FDIC has dismissed myriad harassment complaints and that wrongdoers are moved around internally or promoted.

The law firm's report builds on a damning November story from The Wall Street Journal about the FDIC's toxic work culture and comes as the FDIC faces a probe from the House of Representatives.

Investigators said they set up a hotline in mid-January and received more than 500 complaints — largely from current employees — about sexual harassment, discrimination, and other issues. The FDIC has about 6,000 employees.

Tuesday's report characterized the FDIC's culture as "'misogynistic,' 'patriarchal,' 'insular,' and 'outdated'—a 'good ol' boys' club where favoritism is common, wagons are circled around managers, and senior executives with well-known reputations for pursuing romantic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."

While the FDIC operates an anti-harassment program, the report said it is ineffective. Of the 92 complaints the FDIC received from 2015 through 2023, none resulted in more serious discipline than a suspension — and only two warranted suspensions, while 78 led to no discipline. Investigators said many employees did not report issues because they feared retaliation.

Investigators spoke with one employee who said she "feared deeply for her physical safety" after her colleague, who was stalking her, kept texting her sexually explicit messages, even after she made a complaint against him. Staff from underrepresented groups said they were told they were "token" employees meant to fill quotas.

Tuesday's investigation builds on a 2020 report from the FDIC's inspector general that found the regulator had not created an "adequate" sexual harassment reporting and prevention program. The earlier report also noted widespread fear of retaliation.

The independent investigators spent nine pages discussing FDIC chairman Martin Gruenberg's conduct. Investigators wrote that they heard "credible reports" of Gruenberg's temper, including in meetings as recently as May 2023.

"As the FDIC faces a crisis relating to its workplace culture, Chairman Gruenberg's reputation raises questions about the credibility of the leadership's response to the crisis and the 'moral authority' to lead a cultural transformation," the report said.

Gruenberg said in a statement on Tuesday to employees, released to the public, that he took responsibility for the agency, including its culture. The 71-year-old Democrat has spent nearly a decade in the role under multiple presidential administrations.

"I also want to apologize for any shortcomings on my part," he said.

After the report's publication, some lawmakers from both parties called for Gruenberg's exit. His departure would put vice chairman Travis Hill, a Republican, in the interim seat.

On Tuesday, White House press secretary Karine Jean-Pierre didn't say whether the president still has confidence in Gruenberg.

She said Gruenberg "apologized and has committed to the recommendations" from the law firm.

The FDIC did not immediately respond to a request for comment from Business Insider sent outside standard hours. The agency has not issued a statement beyond Gruenberg's Tuesday message to employees.