The Federal Deposit Insurance Corp. must make sweeping changes to address widespread sexual harassment and other misconduct, an independent report commissioned by the top bank regulator found, according to two sources familiar with the matter.
More than 500 individuals reported instances of misconduct at the agency, most of them current FDIC employees, according to the people who have seen the report, which was authored by law firm Cleary Gottlieb following a five-month investigation.
Cleary Gottlieb also found evidence of widespread retaliation against employees who complained about supervisor misconduct, and little evidence that such retaliation was addressed, the sources said.
They declined to be identified in discussing the report before its expected publication later on Tuesday.
In statement to staff, FDIC Chair Martin Gruenberg, who has been a senior leader at the agency for nearly two decades, said the report offered a “sobering” look at the regulator and said hundreds of staff “reported painful experiences of mistreatment and feelings of fear, anger, and sadness.”
Gruenberg, a Democrat who is in his second stint as FDIC chief, said he was “ultimately responsible” for everything that happened at the agency and apologized for any shortcomings. “I again want to express how very sorry I am,” he added.
The probe was prompted by Wall Street Journal reports last year alleging sexual harassment and other misconduct had gone on for years within the FDIC and was unaddressed by senior leaders, and that in some cases Gruenberg had been personally involved in decisions that failed to punish misconduct.
The report is expected to renew pressure on Gruenberg, who faced calls from Republicans to step down in the wake of the WSJ reports.
President Joe Biden appointed Gruenberg in 2022 and the FDIC chief’s departure would imperil the administration’s efforts to impose stricter financial rules, including a pending regulatory proposal on bank capital requirements, that has sparked a backlash from Republicans and industry representatives.
If Gruenberg steps down or is removed, agency bylaws stipulate that FDIC Vice Chair Travis Hill, a Republican, take over, and the agency’s board would be evenly split between Republicans and Democrats.