FDIC Chair Says He'll Resign Following Toxic Workplace Controversy

Martin Gruenberg, who has served as chairman, vice chairman, and director since August 2005, will step down once a successor is confirmed.
FDIC Chair Says He'll Resign Following Toxic Workplace Controversy
Federal Deposit Insurance Corporation Chairman Martin Gruenberg testifies before the Senate Banking, Housing and Urban Affairs Committee in Washington, on March 28, 2023. (Win McNamee/Getty Images)
Jacob Burg
5/20/2024
Updated:
5/21/2024
0:00

Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg announced his resignation on May 20 and agreed to step down once a successor is confirmed, succumbing to a months-long scandal over allegations of a toxic workplace culture at the regulator.

After a 200-page report detailing “sexual harassment, discrimination, and other interpersonal misconduct” at the banking regulator was released on May 7, House and Senate lawmakers demanded that Mr. Gruenberg resign as FDIC chairman.

“It has been my honor to serve at the FDIC as chairman, vice chairman, and director since August of 2005,” Mr. Gruenberg said in a statement.

“Throughout that time I have faithfully carried out the critically important mission of the FDIC to maintain public confidence and stability in the banking system.”

During hearings before the House Financial Services Committee and the Senate Banking Committee last week, several Republicans grilled the FDIC chairman on the report, which detailed an objectionable work climate and misogynistic culture described as a “sexualized boys’ club environment.”

“I think you ought to resign,” Sen. John Kennedy (R-La.) said.

He also asked Mr. Gruenberg to turn around and apologize to his female staffers.

Originally, the FDIC chair said he would not resign but would assist in overseeing the recommended changes to the regulatory body outlined in the scathing report.

Mr. Kennedy said the chairman, who is alleged to be responsible for the problem in the first place, should not be the one to try to fix it.

“You ought to be ashamed of yourself,” he said.

He then revealed plans for new legislation that would extend the statute of limitations and allow all FDIC employees, both past and present, to file suits against the regulator.

Sen. Sherrod Brown (D-Ohio), who leads the Senate Banking Committee, also called on Mr. Gruenberg to step down.

“After chairing last week’s hearing, reviewing the independent report, and receiving further outreach from FDIC employees to the Banking and Housing Committee, I am left with one conclusion: there must be fundamental changes at the FDIC,” he said in a statement.

“I’m calling on the president to immediately nominate a new chair who can lead the FDIC at this challenging time and for the Senate to act on that nomination without delay.”

In his resignation statement, Mr. Gruenberg acknowledged the report and the scrutiny it brought to the FDIC.

“In light of recent events, I am prepared to step down from my responsibilities once a successor is confirmed.

“Until that time I will continue to fulfill my responsibilities as chairman of the FDIC, including the transformation of the FDIC’s workplace culture,” he said.

The White House stated that President Joe Biden will nominate Mr. Gruenberg’s successor “soon” and echoed Mr. Brown’s calls for the Senate to quickly confirm the nomination.

The report, which was produced by the Cleary Gottlieb Steen and Hamilton law firm, contained more than 500 individuals’ accounts of alleged misconduct at the FDIC, including sexual harassment and discrimination.

One example featured a female examiner who received a photo of a senior FDIC examiner’s genitals.

She was told by others at the agency to “stay away from him because he had a ’reputation.'”

A different employee feared for her safety after another FDIC worker stalked her and repeatedly shared “unwelcome sexualized text messages that feature partially naked women engaging in sexual acts.”

The leaders of various field and regional offices were accused of managing them like “fiefdoms” while commissioned bank examiners “controlled the destinies of junior examiners,” according to the report.

“Those who reported expressed fear, sadness, and anger at what they had to endure,” the report stated.

“Many had never reported their experiences to anyone before, while others who had reported internally were left disappointed by the FDIC’s response.”

In one field office, women detailed how a supervisor regularly talked about their breasts, legs, and sex lives.

In other instances, supervisors mocked workers with disabilities and demoralized those from underrepresented groups or minorities by calling them “token” employees hired simply to fill FDIC quotas.

After the report went public, Mr. Gruenberg told FDIC staffers it detailed “a sobering look inside” the regulator.

He said he was “very sorry” for leading such a hostile work environment.

“As chairman, I am ultimately responsible for everything that happens at our agency, including our workplace culture,” he said at the time.

The FDIC was created during the Great Depression to insure deposits up to $250,000 in case of bank failure.

Sheila Bair, who chaired the FDIC during the 2008 financial crisis and recession, also called for Mr. Gruenberg’s resignation in a May 20 post on social media platform X.

“This controversy is hurting him and his agency,” she said.

“For his own sake and everyone at the FDIC, he should announce his intention to resign effective with the appointment.”

Andrew Moran and The Associated Press contributed to this report.
Jacob Burg reports on the state of Florida for The Epoch Times. He covers a variety of topics including crime, politics, science, education, wildlife, family issues, and features. He previously wrote about sports, politics, and breaking news for the Sarasota Herald Tribune.