FDIC chair faces calls to resign, probe imminent, after reports of toxic workplace

(Ray Bogan | Anchor)

The FDIC chair is facing calls to resign and an investigation is imminent, after a series of Wall Street Journal reports exposed accusations of a toxic workplace at the agency. 

Here’s what happened. 

On Monday, the Wall Street Journal published a report titled: “Strip Clubs, Lewd Photos and a Boozy Hotel: The Toxic Atmosphere at Bank Regulator FDIC”.

It stated: “Employees say sexual harassment, misogyny pervade federal agency tasked with ensuring stability of nation’s banks, driving women to leave”. 

On Tuesday, FDIC Chair Martin Gruenberg appeared before the Senate Banking Committee for a previously scheduled hearing. 

“I am personally disturbed and deeply troubled by this report. The FDIC is conducting a comprehensive review, including engaging an independent third party,” Gruenberg told the committee. “I have no higher priority to ensure that all FDIC employees work in a safe environment where they feel valued and respected.” 

But after the hearing, the Wall Street Journal published another report that said Gruenberg was part of the problem. 

The headline read, “FDIC Chair, Known for Temper, Ignored Bad Behavior in Workplace”. 

It stated, “Martin Gruenberg set a tone that left alleged harassment and discrimination unpunished at the bank regulator.” 

Sen. John Kennedy, R-La., and other Republicans are calling for Gruenberg’s resignation. 

“Have you ever sexually harrased an employee at the FDIC?” Kennedy asked Gruenberg at Tuesday’s Banking Committee hearing.  

“No, sir,” Gruenberg answered.  

“Apparently you’re the only one,” Kennedy responded. 

Democrats are calling for an investigation by the FDIC’s Inspector General. 

“The reports are extremely concerning. I am calling for the FDIC’s Office of the Inspector General to conduct an independent and thorough investigation into the workplace culture at the agency,” Banking Committee Chairman Sherrod Brown, D-Ohio, said in a statement. 

Why the different responses? 

As the Wall Street Journal points out – if Gruenberg, a Democrat, exits, the FDIC board will have an equal number of Republicans and Democrats. 

This controversy is already having a negative impact. A board meeting was canceled Thursday during which members were supposed to finalize a plan to reimburse the FDIC for the billions it distributed after the collapse of Silicon Valley Bank and New York’s Signature Bank. 

In addition to the internal investigation, the Chairman of the House Financial services committee says his panel will conduct a,“rigorous investigation”. 

“Under his leadership, the FDIC is at best preoccupied with this sideshow and at worst compromised,” Chairman Patrick McHenry, R-N.C., said in a statement. 

If Gruenberg leaves the position for any reason, President Biden would have to nominate a new chair who needs senate confirmation.