US bank regulator grilled over ‘toxic culture’ at agency

Martin Gruenberg rebuffed calls for his resignation from the Federal Deposit Insurance Corporation (FDIC) – Copyright AFP ROBERTO SCHMIDT

Daniel AVIS

US lawmakers attacked the head of a top financial regulator for a second consecutive day on Thursday over his agency’s failure to deal with workplace misconduct, including discrimination and sexual harassment. 

Republicans on the Senate Banking Committee called on Federal Deposit Insurance Corporation (FDIC) chair Martin Gruenberg to step down after an independent report found that the agency, set up to protect bank deposits, had failed to tackle workplace misconduct issues going back years.

Gruenberg has led the FDIC on and off for more than a decade since 2005, under both Republican and Democrat presidents, and was recently reappointed to the top job at the regulator by Joe Biden.

“You should resign,” Republican Senator Tim Scott told Gruenberg. “Your employees do not have confidence in you.”

“This is not a single incident,” added Scott. “This spans over a decade-plus of your leadership of the FDIC.”   

Democrats on the committee also critiqued Gruenberg’s leadership of the FDIC but stopped short of calling for his resignation — accusing their Republican colleagues of playing politics. 

“Chairman Gruenberg, the Republicans who have called today for your resignation are engaged in a purely political exercise,” Senator Elizabeth Warren said, accusing her colleagues of looking to replace Gruenberg with a Republican appointee.

“Your resignation would do nothing to improve the toxic culture at the FDIC, but it would give Republicans a veto over bank policy,” she added.

– Harassment, discrimination –

The FDIC commissioned the report into workplace misconduct after concerns were raised about its workplace practices.

“For far too many employees and for far too long, the FDIC has failed to provide a workplace safe from sexual harassment, discrimination, and other interpersonal misconduct,” the report’s authors found.

They said a “patriarchal, insular, and risk-averse culture” had played a role in letting workplace misconduct persist at the FDIC, and that a “widespread fear of retaliation” had led to underreporting of misconduct.

“Management’s responses to allegations of misconduct, as well as the culture and conditions that gave rise to them, have been insufficient and ineffective,” they continued, adding that “cultural and structural change” was needed.

The report’s publication overshadowed Gruenberg’s pre-planned appearance in Congress to discuss US bank regulation, along with Federal Reserve vice chair for supervision Michael Barr, and Michael Hsu, the acting comptroller of the Office of the Comptroller of the Currency. 

“I accept the findings of the report, and as Chairman I take full responsibility,” Gruenberg told lawmakers, while rebuffing calls for his resignation.

Gruenberg said he was “personally committed” to addressing the issues raised in the report, and implementing its recommendations. 

“Our employees are extraordinarily dedicated to the agency and its mission,” he said. “They deserve to have a workplace where all feel safe, valued and respected.”