First House Democrat calls on FDIC chair to resign after sexual harassment report

Rep. Bill Foster (D-Ill.) called on FDIC Chair Martin Gruenberg to resign on Tuesday after a law firm’s investigation confirmed a report of rampant sexual misconduct, lewd behavior and retaliatory administrative practices at the federal banking regulator.

Foster became the first House Democrat to call for Gruenberg’s resignation, joining some fellow Republicans, including the chairman of the House Financial Services Committee, Rep. Patrick McHenry (R-N.C.), and members of the Senate Banking Committee, who in December similarly called for Gruenberg to step down.

“I am appalled and deeply disturbed by the details of widespread sexual harassment and discrimination at the FDIC outlined in the report released today, and I commend the brave individuals who came forward to shed light on these abuses,” Foster wrote on X.

“Sweeping changes must be made to mend the toxic work environment that has run rampant for far too long, and that starts with a change of leadership,” he continued, “It is time for Chair Gruenberg to resign.”

The investigation, undertaken by law firm Cleary Gottlieb Steen & Hamilton, was commissioned by the FDIC following a Wall Street Journal investigation, which painted a picture of the agency as a degenerate boys’ club rife with cases of sexual harassment and misogynistic behavior toward women.

The law firm’s investigation described the culture as “patriarchal, insular, and risk-averse,” and revealed more than 500 cases of individuals who experienced workplace misconduct.

“We have completed our review, and find that, 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 executive summary of the report, published on Tuesday, read.

The report found that the toxic culture “has contributed to the conditions that allowed for this workplace misconduct to occur and persist, and that a widespread fear of retaliation, as well as a lack of clarity and credibility around internal reporting channels, has led to an underreporting of workplace misconduct over the years.”

The report did not lay blame directly on Gruenberg for the sexual harassment, but it revealed a staff that were often fearful of the chair “losing his temper and interacting with staff in a demeaning and inappropriate manger.” It also said management’s responses to the allegations of misconduct “have been insufficient and ineffective.”

“While we do not find Chairman Gruenberg’s conduct to be a root cause of the sexual harassment and discrimination in the agency or the long-standing workplace culture issues identified in our review, we do recognize that, as a number of FDIC employees put it in talking about Chairman Gruenberg, culture ‘starts at the top,’” the report read.

The report called for a “cultural transformation,” which it indicated might be difficult for Gruenberg, since he has led the organization for ten of the last 13 years and worked at the agency for almost 20 years. He has also developed a reputation for getting angry and losing his temper, the report said.

“These attributes may hinder his ability to establish trust and confidence in leading meaningful culture change, and so too may his apparent inability or unwillingness to recognize how others experience certain difficult interactions with him,” the report read.

“For these challenges to be overcome, there must at least be a genuine and sustained commitment to lead a culture change, accompanied by a recognition and acknowledgement that such change is necessary because of failings of the past, including his own,” the report continued.

Gruenberg, ahead of the report’s release, apologized to the staff but did not indicate any plans to resign. He said the investigation presented a “sobering look” inside the FDIC and that he accepted its findings and recommendations.

“To anyone who experienced sexual harassment or other misconduct at the FDIC, I again want to express how very sorry I am,” Gruenberg wrote to staff. “I also want to apologize for any shortcomings on my part.”

“Hundreds of our colleagues reported painful experiences of mistreatment and feelings of fear, anger, and sadness,” Gruenberg wrote, pledging to implement the report’s recommendations.