FDIC create offices to address toxic workplace culture following probe

The Federal Deposit Insurance Corporation announced the creation of two offices aimed at improving the agency’s workplace culture, after an independent investigation revealed allegations of sexual harassment and workplace misconduct.

The review of FDIC’s workplace culture was released last May, conducted by the law firm Cleary Gottlieb Steen & Hamilton, which the FDIC’s Special Committee oversaw. The report showcased the toxic work environment within the agency, filled with stalking, sexual harassment and favoritism, along with other workplace violations.

“We also find that a patriarchal, insular, and risk-averse culture has contributed to the conditions that allowed for this workplace misconduct to occur and persist, and that a widespread fear of retaliation, as well as a lack of clarity and credibility around internal reporting channels, has led to an underreporting of workplace misconduct over the years,” the report states.

The report claimed more than 500 employees used their hotline to recount personal experiences of harassment, discrimination and other instances of workplace misconduct. Some employees have never told anyone about their experience before, while others reported internally, but were left “disappointed” by the agency’s response, according to the report.

One of the new offices approved by the FDIC is the Office of Professional Conduct where employees can file claims on harassment, retaliation and misconduct. The office will then investigate, determine and enforce disciplinary action, an issue seen in the report. The report showed a lack of accountability among those in the FDIC.

The second office approved is the Office of Equal Opportunity, which will take, investigate and report on complaints of discrimination and retaliation outlined in laws under the Equal Employment Opportunity Commission.

Both offices will use independent, third-party investigators, and the FDIC still needs to appoint directors to both offices.

The report also followed Chairman Martin Gruenberg’s behavior in the FDIC and classified “unsettling,” outlining instances where the chairman lost his temper on his employees.

Even though Gruenberg apologized for his behavior on the agency’s website, lawmakers still called on him to resign from his post. In a June 12 hearing , held by the House Financial Services Committee, committee members took a look into the FDIC’s toxic workplace culture and failed leadership.

“While we do not find Chairman Gruenberg’s conduct to be a root cause of the 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,’” the report said.

The report recommended that the agency institute requests for proposals, and the agency announced they have issued two RFPs: the Independent Transformation Monitor and the Expert Third-Party. The Independent Transformation Monitor will monitor all recommendation to improve the FDIC’s culture and structure, and the Expert Third-Party will guide those efforts.

According to the June 28 announcement, the FDIC’s Board of Directors will make final selections on the RFPs after they received proposals.