FDIC chair is grilled on Capitol Hill after report outlines agency’s toxic workplace culture

WASHINGTON (AP) — Federal Deposit Insurance Corp. Chairman Martin Gruenberg sat for a second day of grilling Thursday on Capitol Hill, this time at the Senate Banking Committee, after a damning report about the agency’s toxic workplace culture was released last week.

The hearing was called to address oversight of financial regulators, including the Office of the Comptroller and the Federal Reserve, but two days of testimony have largely focused on the workplace culture at the FDIC and failures, according to the report, by Gruenberg to prevent hundreds of instances of harassment and discrimination against employees.

An independent review of the FDIC ‘s workplace culture released last week describes an environment that fostered “hostile, abusive, unprofessional, or inappropriate conduct,” and questions whether the agency’s chairman is able to lead the agency through a cultural transformation.

The report released Tuesday by law firm Cleary Gottlieb Steen & Hamilton cites incidents of stalking, harassment, homophobia and other violations of employment regulations, based on more than 500 complaints from employees.

Complaints included a woman who said she was stalked by a coworker and continually harassed even after complaining about his behavior; a field office supervisor referring to gay men as “little girls”; and a female field examiner who described receiving a picture of an FDIC senior examiner’s private parts.

The FDIC is one of several banking system regulators. The Great Depression-era agency is best known for running the nation’s deposit insurance program, which insures Americans’ deposits up to $250,000 in case their bank fails.

On Thursday, Republican lawmakers roundly called on Gruenberg, who is a Democrat, to resign, after a similar grilling at the House Financial Services Committee on Wednesday. At Thursday’s hearing, Sen. Tim Scott (R-SC) detailed several stories of female FDIC workers who outlined extreme harassment and stalking by their coworkers, complaints that were dismissed by supervisors, according to the report.

“Marty — you’ve heard me say this to you directly — you should resign,” Scott said. “Your employees do not have confidence in you. And this is not a single incident. This spans over a decade-plus of your leadership at the FDIC.”

Gruenberg said in his testimony that he takes “full responsibility to anyone who has experienced sexual harassment, discrimination or other misconduct at the FDIC. I again want to apologize and express how deeply sorry I am.”

Democratic Senators did not call on the agency chairman to resign, but called on Gruenberg to change the agency.

“Chair Gruenberg, it’s up to you to prove to the public and to your employees that you are that leader, and are able to restore confidence in the FDIC,” Committee Chair Sen. Sherrod Brown (D-OH) said.

Sen. John Kennedy said he plans to introduce a bill that will extend the statute of limitations for FDIC employees to file suit over the abuses they experienced while employed at the agency.

“Have you ever heard the expression ‘a fish rots from the head down?’” Kennedy (R-LA) asked Gruenberg, adding, “you’re not going to be able to clean up the FDIC because you’re going to be too busy defending yourself in court.”

Gruenberg heard similar comments to either step down or make serious reforms from Democrats and Republicans on Wednesday, when he appeared in front of the House Financial Services Committee.

“There is a deficit of trust and your credibility has been undermined,” said Rep. Ayanna Pressley, D-Massachusetts, at Wednesday’s hearing.

Fatima Hussein, The Associated Press