FDIC chairman Martin Gruenberg resigns after report found toxic workplace culture inside the banking regulator
- FDIC Chair Martin Gruenberg announced his plan to step down amidst a scandal
- Report found sexual harassment and a toxic workplace culture at the regulator
- Gruenberg, whose term ends in 2028, will resign once a successor is confirmed
U.S. Federal Deposit Insurance Corp Chair Martin Gruenberg said on Monday he planned to step down, finally succumbing to a months-long scandal over sexual harassment and other misconduct at the top bank regulator.
Gruenberg, whose five-year term ends in 2028, said he would step down once a successor is confirmed.
'In light of recent events, I am prepared to step down from my responsibilities once a successor is confirmed,' Federal Deposit Insurance Corporation (FDIC) chairman Martin Gruenberg said in a statement.
'Until that time, I will continue to fulfil my responsibilities as Chairman of the FDIC, including the transformation of the FDIC's workplace culture,' he added.
The report released last Tuesday cited incidents of stalking, harassment, homophobia and other violations of employment regulations, based on more than 500 complaints from employees.
![Martin Gruenberg offered to resign after bipartisan calls for his resignation](https://i.dailymail.co.uk/1s/2024/05/21/02/85127075-13440781-Martin_Gruenberg_offered_to_resign_after_bipartisan_calls_for_hi-a-7_1716254648431.jpg)
Martin Gruenberg offered to resign after bipartisan calls for his resignation
![The FDIC is America's top banking regulator and is responsible for protecting the public's money in the event of a bank failure](https://i.dailymail.co.uk/1s/2024/05/21/02/77738417-13440781-The_FDIC_is_America_s_top_banking_regulator_and_is_responsible_f-a-8_1716254682100.jpg)
The FDIC is America's top banking regulator and is responsible for protecting the public's money in the event of a bank failure
The 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.
Over 100 current and former employees interviewed said at least 20 women had quit due to an alleged culture of 'sexual harassment and misogyny.'
The claims made to the WSJ - which span over a decade - include a male supervisor in San Francisco inviting employees to a strip club and a supervisor in Denver having sex with an employee and telling others about it.
All of the men at the center of the claims are reportedly still employed by the FDIC, despite various legal filings, union grievances and complaints relating to their alleged bad behavior.
The reports also found the FDIC had 'failed to provide a workplace safe from sexual harassment, discrimination and other interpersonal misconduct,' and that a 'patriarchal, insular and risk-averse culture' existed at the agency.
It said that a 'widespread fear of retaliation' had led to underreporting of misconduct, and that the response from management had been 'insufficient and ineffective.'
The report also looked into reports that Gruenberg had a reputation within the FDIC for having a temper, and found some employees experienced 'deeply unsettling exchanges during which he was extremely 'harsh,' 'aggressive,' and 'upset.''
The report's authors said that while Gruenberg's conduct was not 'a root cause of the sexual harassment and discrimination in the agency,' workplace culture 'starts at the top.'
Many of the allegations center on the FDIC's 'party hub' 11-story hotel outside Washington, where employees stay when attending training.
The FDIC spent over $100million on the hotel in the 1980s - and former employees told the Journal employees allegedly regularly get drunk, vomit in the elevator and urinate off the roof.
![Lauren Lemmer quit in 2013 over claims she had been repeatedly harassed and denied advancement opportunities](https://i.dailymail.co.uk/1s/2024/05/21/02/77739357-13440781-Lauren_Lemmer_quit_in_2013_over_claims_she_had_been_repeatedly_h-a-13_1716254866553.jpg)
Lauren Lemmer quit in 2013 over claims she had been repeatedly harassed and denied advancement opportunities
Two of the former female employees who have spoken out - Lauren Lemmer and Kelsi Foutz - said they were repeatedly harassed by their male colleagues.
One of the whistleblowers, Lemmer, quit her job as an examiner-in-training in 2013 after working for the regulator for three years.
She told the Journal that during her stint with the FDIC she was followed back to her Dallas hotel room by a male colleague during training, invited to a strip club in Seattle by other bank examiners and sent an unsolicited naked photo by a colleague.
Lemmer said senior colleagues - including her supervisor Trevor McIntosh - regularly made comments over her appearance and her dating life.
She wasn't the only woman to complain about McIntosh, in 2015, a union steward said he raised concerns about McIntosh as well.
McIntosh denied making sexual comments to the WSJ.
![Kelsi Foutz quit last year after senior male colleagues allegedly made repeated inappropriate sexual comments](https://i.dailymail.co.uk/1s/2024/05/21/02/77739355-13440781-Kelsi_Foutz_quit_last_year_after_senior_male_colleagues_allegedl-a-14_1716254880003.jpg)
Kelsi Foutz quit in 2022 after senior male colleagues reportedly made inappropriate comments
Kelsi Foutz, a senior risk management examiner who worked in Salt Lake City and San Francisco, quit last year over similar allegations.
She told the Journal she was advised not to raise a negative performance review with her reviewer as he 'is just intimidated by tall, beautiful women,' while two male managers advised her to 'just smile and make him feel good.'
Her first experience with misogyny at the agency came after she joined at 21 years old in 2013.
She said a senior married examiner told her he wasn't having enough sex over lunch and added: 'Obviously if I walked into this office and you were naked, I’d f*** you right here.'
The FDIC is an independent federal agency with fewer than 6,000 employees - it is funded by insurance premiums paid by banks, not the federal budget.
The White House will soon put forward a nominee to replace him, deputy press secretary Sam Michel said in a statement.
President Biden expects the FDIC 'to reflect the values of decency and integrity and to protect the rights and dignity of all employees,' Deputy Press Secretary Sam Michel said in a statement.
![](https://i.dailymail.co.uk/1s/2024/05/21/02/85131805-13440781-image-m-36_1716255108946.jpg)
The report's authors said that while Gruenberg's conduct was not 'a root cause of the sexual harassment and discrimination in the agency,' workplace culture 'starts at the top'
The pending departure of Gruenberg, a Democrat and Wall Street critic who had been a senior leader at the FDIC for nearly two decades, comes at a critical time for the agency - just a year after three major banks failed and as many lenders continue to struggle amid elevated Federal Reserve interest rates.
The FDIC is also working with other bank regulators on several efforts to tighten regulations, including a contentious plan to boost big bank capital requirements.
With Gruenberg staying on until a replacement is announced, Democrats can claim a moral victory while allowing the agency to continue with its regulatory agenda, said Todd Baker, a senior fellow at Columbia University's law and business schools.
'It's a stalemate and it achieves most of the goals of the administration - that is, to retain control over the FDIC´s agenda,' he added.
Gruenberg had clung to his job since November when a Wall Street Journal report exposed widespread misconduct at the FDIC, despite outcry from multiple congressional Republicans and some Democrats.
The newspaper report was confirmed by a damning external review this month.
Before Monday, no Democrats had called for Gruenberg's ouster, although several came very close to doing so.
![Ohio Senator Sherrod Brown, the most powerful Democrat in Congress on banking and financial issues called for President Joe Biden to replace the chairman of the FDIC on Monday saying the agency is broken and there must be "fundamental changes at the FDIC."](https://i.dailymail.co.uk/1s/2024/05/21/02/85127395-13440781-FILE_Sen_Sherrod_Brown_D_Ohio_speaks_during_a_Senate_Commerce_Sc-a-6_1716254590950.jpg)
Ohio Senator Sherrod Brown, the most powerful Democrat in Congress on banking and financial issues called for President Joe Biden to replace the chairman of the FDIC on Monday saying the agency is broken and there must be 'fundamental changes at the FDIC.'
But Ohio Senator Sherrod Brown, who chairs the Senate Banking Committee, said there must be 'fundamental changes' at the agency and called for Gruenberg to be replaced, saying his leadership at the FDIC could no longer be trusted.
Gruenberg was grilled for two days last week on Capitol Hill in hearings largely focused on the FDIC's workplace culture and the failures disclosed in the report prepared by an outside law firm.
'After chairing last week's hearing, reviewing the independent report, and receiving further outreach from FDIC employees to the Banking and Housing Committee, I am left with one conclusion: there must be fundamental changes at the FDIC,' Brown said in a statement.
Those changes begin with new leadership, who must fix the agency's toxic culture and put the women and men who work there -- and their mission -- first.'
Republicans have been calling for Gruenberg's ouster for some time and criticized the White House for not calling for his immediate departure.
Gruenberg has held positions in various levels of leadership at the FDIC for nearly 20 years, and this was his second full term as FDIC chair.
His long tenure at the agency made him largely responsible for the agency's toxic work environment, according to the independent report outlining the problems at the agency.
Analysts said it was unclear how long it could take the White House to get a new nominee through the thinly divided Senate, while Brown's Republican counterpart, Senator Tim Scott, and other Republicans called for Gruenberg to go immediately.
'We're skeptical that Gruenberg will be able to hang on,' Ian Katz, managing director of policy research firm Capital Alpha Partners, wrote in a note. 'This is like trying to contain a raging fire.'
Should Gruenberg leave the agency without a confirmed replacement, leadership of the FDIC would fall to Travis Hill, the agency's vice chair and a Republican. The agency would then be deadlocked 2-2.
Gruenberg, 71, had been at the FDIC since 2005 and is the longest-serving FDIC board member in the agency's 89-year history.
During that time he served as its chair twice - once under President Barack Obama and the second under Joe Biden.
Last week, Gruenberg testified alongside several other banking regulators before Congress.
He vowed to take steps to address longstanding cultural issues at the agency, as well as his own personal conduct, after the review found multiple instances in which he lost his temper with subordinates.
But Republicans and Democrats alike expressed skepticism that Gruenberg would be able to overhaul the agency.
He was sworn in to his current five-year term as chair of the FDIC in January 2023. He had also served as chairman from November 2012 to mid-2018.
'After chairing last week's hearing, reviewing the independent report, and receiving further outreach from FDIC employees to the Banking and Housing Committee, I am left with one conclusion: there must be fundamental changes at the FDIC. Those changes begin with new leadership,' Brown said in his statement.
The FDIC is one of several U.S. 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.