A report on workplace culture at the Federal Deposit Insurance Corporation released on Tuesday revealed a broad, yearslong pattern of sexual harassment, discrimination and abuse of mostly women and members of minority groups by senior officials. The findings are likely to lead to another potentially bruising round of questions for the agency’s chair, Martin Gruenberg, who is scheduled to testify in Congress later this month.
The report said the bad behavior at F.D.I.C., which has the authority to monitor the health and stability of all U.S. banks but more closely oversees smaller institutions, affected “far too many employees” and went on “far too long.”
The agency’s problems were caused by “a patriarchal, insular, and risk-averse culture” and a “lack of clarity and credibility around internal reporting channels,” said the report, prepared by the law firm Cleary Gottlieb. It described “fiefdoms” in regional offices, where senior managers protected other longtime employees from potential consequences stemming from more junior employees’ claims of mistreatment.
Examples of the behavior, including senior examiners texting junior women pictures of their genitalia or taking them to brothels, were first reported by The Wall Street Journal in November. Tuesday’s report was the result of an independent investigation by Cleary Gottlieb, which was hired by a special committee created by the agency’s board after The Journal’s report.
The report questioned whether Mr. Gruenberg, who has worked at the agency for almost two decades and led it for 10 of the last 13 years, could effectively continue in his role.
“The incidents of — and resulting reputation for — losing his temper and expressing anger with staff,” it said, “may hinder his ability to establish trust and confidence in leading meaningful culture change.” The report also cited Mr. Gruenberg’s “apparent inability or unwillingness to recognize how others experience certain difficult interactions with him.”
In a memo to F.D.I.C. staffers on Tuesday that was shared with The New York Times, Mr. Gruenberg apologized for his behavior.
“To anyone who experienced sexual harassment or other misconduct at the F.D.I.C., I again want to express how very sorry I am. I also want to apologize for any shortcomings on my part. As chairman, I am ultimately responsible for everything that happens at our agency, including our workplace culture,” he wrote.
The report did not recommend that Mr. Gruenberg step down or be removed. It prescribed new systems for protecting victims of abuse, a new role to monitor culture, more training to improve workplace behavior and better reporting systems for employees experiencing mistreatment.
But it could fuel new calls for Mr. Gruenberg to depart. Republicans in Congress have been pushing for him to resign since last fall, while Democrats criticized his behavior as reported by The Journal and called for an independent investigation.
More than Mr. Gruenberg’s career is at stake. Bank executives and lobbyists, who generally oppose a new plan proposed by federal regulators to increase capital requirements on the largest institutions, believe that if Mr. Gruenberg leaves the F.D.I.C., there will not be enough support for the plan left among the other regulators and it will have to be scrapped.
Mr. Gruenberg is set testify before the House Financial Services Committee on May 15 and the Senate Banking Committee on May 16 in semiannual hearings on financial regulation.
