FDIC leadership failed to implement harassment prevention measures: OIG

Bloomberg News

WASHINGTON — A report by the Office of the Inspector General for the Federal Deposit Insurance Corp. found agency leadership failed to see through sexual harassment prevention measures initiated in 2020, but acknowledged that the agency has begun to overhaul its programs for identifying and tracking harassment allegations. 

Despite the FDIC OIG issuing recommendations in response to deficiencies it found in a 2020 evaluation of the FDIC workplace, the agency watchdog says FDIC leadership failed to sustain corrective efforts, which allowed an environment of distrust and fear of retaliation at the agency to persist. The inspector general says the agency has begun to implement an action plan to address workplace culture.

"We found during our evaluation that the FDIC was not following the investigation procedures and had not updated the procedures since our last review; abandoned the tracking system and replaced it with one developed in-house which was no longer tracking the recommended data elements; and had not fully implemented the [Anti-Harassment Program] Oversight Plan," the report stated. "Therefore, in these cases, the FDIC has regressed on the progress that was made in response to our prior recommendations."

In investigating the FDIC's compliance with its past recommendations, the OIG sent surveys to all 6,210 FDIC employees. They found that 191 employees — 7% of the 2,812 survey respondents — reported experiencing sexual harassment at the agency between April 2019 and January 2024. While this represents roughly the same number of respondents who said they had experienced harassment in the OIG's 2020 findings, the OIG notes the FDIC had only disclosed 34 allegations since April 2019, which they say "indicat[es] an underreporting of sexual harassment allegations."

Nearly half of those who experienced harassment said they did not report it to the agency out of fear of retaliation, up from 38% who said the same in the OIG's prior survey. Employees did however report a better understanding of how to report incidents, with 71% of respondents aware of the channels available for filing reports, compared with 60% in the prior survey.

The FDIC said it agreed with the report and is prioritizing the OIG's recommendations.

“We agree with all of the recommendations in the report and are making substantial progress to address them," said an agency spokesperson. "The FDIC is committed to implementing an effective sexual harassment prevention program.”

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The report went on to note that FDIC leadership demonstrated inadequate commitment and accountability toward its Anti-Harassment Program; lacked an effective AHP structure and robust system for tracking allegations, and failed to provide sufficient anti-harassment training.

"The weaknesses we identified in the FDIC's AHP occurred as a result of a lack of attention and action by FDIC leadership at several levels to assessing and improving the program, and a failure to sustain many prior actions in response to OIG recommendations," the OIG noted. "As such, the FDIC cannot attain its goal of a harassment-free environment, including sexual harassment, until significant changes are made to its program."

Sexual harassment at the FDIC has been a problem for a long time, but was brought more fully to light last year with the publication of a Wall Street Journal article detailing hundreds of instances of sexual harassment, racial discrimination and ineffective responses to both by management spanning decades. Those findings were broadly corroborated by an independent investigation commissioned by the agency itself earlier this spring; FDIC Chair Martin Gruenberg said he will resign from the agency upon the confirmation of a replacement.

In July 2020, the inspector general published a report revealing many of the same deficiencies in the FDIC's program to prevent sexual harassment. The OIG made 15 recommendations including enhancing policies and procedures, fostering a no-tolerance culture, ensuring consistent discipline and improving training for employees and supervisors. 

In response, the FDIC — then led by Chair Jelena McWillaims — acknowledged the potential for program improvements but disagreed with the OIG's conclusion that the program was inadequate, saying employees often preferred informal resolutions, which the FDIC believed should be encouraged.

Despite disagreeing with the OIG's conclusion, the FDIC agreed to 12 of the 15 recommendations and proposed alternative actions for the remaining three. 

The OIG says the FDIC took several subsequent corrective measures, such as updating policies, defining roles more clearly, implementing a tracking system for allegations and disciplinary actions, and establishing an oversight plan. By September 2021, the OIG concluded that the FDIC's actions were responsive, closing all 15 recommendations.

President Biden nominated CFTC Commissioner Christy Goldsmith Romero for the position. Although she has undergone Senate Banking Committee hearings, Chairman Sherrod Brown has not yet scheduled a floor vote for her confirmation, leaving Martin Gruenberg temporarily leading the FDIC.

Prospective Chair Goldsmith Romero has vowed to undertake an overhaul of the FDIC's workplace culture at a July Senate Banking Hearing. 

"I would prioritize a complete overhaul of the FDIC's workplace culture," she said. "I think you start with the tone at the top and what's acceptable and you send clear messages as to what's acceptable and what's not."