FDIC sets up two oversight offices in wake of scandals

Bloomberg News

The Federal Deposit Insurance Corp. is setting up two new divisions to help oversee employee conduct and improve hiring practices.

The new offices, announced Friday morning, are part of the agency's response to last month's bombshell report on sexual harassment, discrimination and various other misconduct. The revelations — and ensuing political fallout — also resulted in FDIC chair Martin Gruenberg announcing that he would step down upon the Senate confirmation of a replacement.

The Office of Professional Conduct, or OPC, will be tasked with taking in and investigating complaints about harassment and violations of the agency's conduct policies. Meanwhile, the Office of Equal Employment Opportunity, or OEEO, will be responsible for reports of discrimination.

The FDIC plans to name new corporate officers to lead the new divisions. Those individuals will report to the agency's board of directors.

"The FDIC Board adopted these fundamental structural changes to the agency's current framework for handling claims of harassment, discrimination, other interpersonal misconduct, and retaliation following feedback from FDIC employees, as well as recommendations in an independent third-party review of the agency's workplace culture," the FDIC said in a prepared statement. "The new offices approved today will have separate functions because each must operate under distinct sets of law and policy."

Acting Comptroller of the Currency Michael Hsu, who sits on the FDIC Board of Directors, praised the creation of the two offices, calling it an "important step in protecting the employees of the FDIC and earning back their trust." 

Hsu called the agency's current system for enforcing policies "broken" and in need of transformation.

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"The employees of the FDIC need and deserve a safe and inclusive workplace," Hsu said in a written statement. "For far too long, however, the fear of retaliation and a confusing, ineffective complaints process have prevented that. Such fear and confusion led to underreporting, a lack of accountability, and space for wrongdoers to perpetuate the old boys' club."

The FDIC's cultural deficiencies first came to light last fall thanks to a scathing investigation by the Wall Street Journal, which detailed a decade of harassment, belittlement and mistreatment of female employees within the banking regulator. It also described an overall toxic workplace environment that stretched back more than a decade.

Lawmakers promptly grilled Gruenberg about the details of the report. He survived the initial round of criticisms, but political pressure to change leadership mounted following the publication of an independent probe by the law firm Cleary Gottlieb, leading Gruenberg — who has served on the FDIC board of directors since 2005 — to announce his intention to resign. On May 20, he said he would step aside once a new leader was put in place.

Last week, the Biden administration tapped Christy Goldsmith Romero, a Democratic member of the Commodity Futures Trading Commission, to take the reins of the FDIC. She is set to go before the Senate Banking Committee for a nominating hearing next month. If approved by the committee, her nomination will be put to a vote by the whole Senate. 

Along with their different mandates, the two new offices established by the FDIC this week will have slightly different capabilities. 

The OPC will enforce the rules set forth by the FDIC's Anti-Harassment Program Directive. It will have the ability to discipline employees deemed to be violating the guidelines. The OEEO, meanwhile, will enforce government-wide standards laid out by the Equal Employment Opportunity Commission — to which it will report any violations of code.