Revelations from the FDIC report on sexual harassment, toxic workplace

An investigation by a law firm confirmed that the Federal Deposit Insurance Corp. failed to provide a workplace safe from sexual harassment, discrimination, fear of retaliation, and called for a “necessary” cultural and structural change at the federal banking regulator.

The review, conducted by the Cleary Gottlieb Steen & Hamilton, sharply criticized the toxic work environment at the FDIC. The “patriarchal, insular, and risk-adverse culture” has resulted in the underreporting of misconduct and the response from management has been insufficient, the report said.

More than 500 employees participated in the investigation, “often painfully and emotionally recounting experiences of sexual harassment, discrimination, and other interpersonal misconduct that they have suffered at the FDIC.”

Women reported instances of stalking, unwanted sexual text messages from colleagues, and inappropriate sexual comments from supervisors, including being someone’s surrogate and comments about their breasts and legs.

Individuals reported that an employee with a disability was made fun of by a supervisor and nicknamed, “Pirate McNasty.” Others reported homophobic statements, including referring to gay men as “little girls,” the report said.

People from underrepresented groups were told by colleagues that they were “only hired” because they were a minority and were “token” employees hired to fill a quota.

The report noted that many of the reported incidents happened years ago, but some happened as little as a few weeks ago. They happened in field and regional offices, but also in the Washington, D.C. headquarters. Wrongdoers were not held to account for their misconduct, just moved to other offices or positions, the report said.

The investigation was commissioned by the FDIC after an investigation by the Wall Street Journal painted a picture of the agency as a boys’ club with rampant sexual harassment cases and discrimination toward women.

FDIC Chair Martin Gruenberg apologized to his staff Tuesday before the report was released to the public. He said the report presented a “sobering look” at the FDIC’s culture and accepted the law firm’s findings and recommendations.

The report has already renewed calls for Gruenberg’s resignation. The review board noted he has been with the FDIC for almost 20 years, while the agency has built its bad reputation, and building trust and changing the culture would be a difficult challenge to overcome.

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