Senators press Fed, OCC after FDIC scandal raises questions about workplace culture

Senators are broadening their inquiry into the conduct of the major U.S. financial regulators after a cultural scandal at the Federal Deposit Insurance Corporation (FDIC) has increased scrutiny into the workforces of the Federal Reserve and the Office of the Comptroller of the Currency (OCC).

Following an investigation last month by The Wall Street Journal alleging a culture of misogyny and sexism metastasized across the FDIC in recent years, Sens. Bill Hagerty (R-Tenn.) and Kyrsten Sinema (I-Ariz.) penned a letter Monday to the heads of the Fed, the OCC and the FDIC asking how their agencies deal with harassment and misconduct.

Specifically, the senators want to know how the agencies use nondisclosure agreement orders with their employees, and to what extent they’re related to making payouts to officials that leave their rosters.

“What is your agencies’ practice of using non-disclosure agreements (NDAs)? Under what circumstances do you use them? How often has the use of NDAs led to monetary pay-outs to employees who signed NDAs?” the senators asked in the letter.

Their letter also requests information on how the agencies handle complaints regarding misconduct, which the Journal’s investigation found prompted fears of retaliation in the case of the FDIC.

“What is the agency’s policy if the offending individuals are senior staff or agency principals? Have there been instances in the past ten years in which senior staff or agency principals have engaged in workplace misconduct?” the letter said.

The letter follows a call for the resignation of FDIC chair Martin Gruenberg by five Republican senators on the Banking Committee last week, who also demanded information from the FDIC on its complaint and harassment policies.

“In most cases the allegations of harassment and discrimination were met with little to no disciplinary action on the part of the alleged perpetrators, creating an environment in which victims were made to continue working with their harassers,” Sens. Tim Scott (R-S.C.), Thom Tillis (R-N.C.) and others wrote of suggestions made by the Journal’s reporting.

Sinema’s involvement in the latest inquiry is of note.

She was instrumental in preserving a notorious loophole in the tax code in 2022 allowing hedge funds and private equity firm managers to receive their income at preferential tax rates, earning her the title of “Wall Street’s favorite senator.”

Senate Majority Leader Chuck Schumer (D-N.Y.) called her out last August for preserving the “carried interest” loophole after the passage of the Inflation Reduction Act, one of the Biden administration’s signature pieces of legislation.

“I believe strongly in [closing] the carried interest loophole. I have voted for it. I pushed for it, I pushed for it to be in this bill. Senator Sinema said she would not vote for the bill, not even move to proceed, unless we took it out. So we have no choice,” Schumer said last August.