The Federal Deposit Insurance Corp. faces unresolved workplace culture issues and staff attrition that threatens its ability to fulfill its regulatory responsibilities, according to a report by the agency's Office of Inspector General.
Long-standing workplace culture concerns and the Trump administration's efforts at government restructuring are major challenges for FDIC staff, the OIG
"As a result of staff attrition, the FDIC will need to ensure that it has sufficient staff with the necessary skills and qualifications to complete statutorily required examinations and should assess the impact of attrition on the FDIC's capacity to execute resolutions and receiverships effectively," the OIG said in its report. "We also previously identified, and continue to find, that the FDIC has not established an accountable workplace culture, including an adequate sexual harassment prevention program."
Since January, the FDIC has reduced its workforce by 9% — or 718 employees — through either dismissals, retirements or voluntary exits. The OIG said 17% of the remaining staff are eligible for retirement this year, including leaders of key divisions.
These reductions strain the FDIC's ability to conduct required bank examinations, execute resolutions and receiverships and retain experienced personnel — especially as past reports indicate early-career examiners have left at a higher rate than retirees.
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The OIG identified the "top challenges" facing the agency. Among these, the FDIC needs to work on ensuring that its leaders are effectively overseeing its operations and that the remaining employees have the necessary skills to continue doing important work, and to update its plans and processes for handling large bank resolutions, the OIG said.
The OIG further identified work to be done on the FDIC's identification of emerging financial risks, the revamp of its internet technology systems and a better way to address scams in the financial sector.
"The pace of change and fluidity regarding the status and composition of the FDIC make it difficult to assess the full impact of these changes on the FDIC and its mission," the OIG said. "We acknowledge that the FDIC may undergo significant changes that may impact our currently identified top challenges."
The OIG said that while cuts at the agency offer a chance to reshape operations and foster employee growth, they also threaten its ability to examine the institutions it oversees.
"With fewer examiners, the agency may struggle to complete its statutorily required safety and soundness examinations," the OIG said in its report. "The FDIC may need to modify examination processes to compensate for the loss of experienced staff."
Staffing cuts are also affecting the FDIC's resolution and receivership capabilities. By February, at least a fifth of the agency's division of resolutions and receiverships staff had departed while another quarter were eligible for retirement within the year, the OIG said. The division of complex institution supervision and resolution also saw more than 10% of its workforce lost, particularly in the resolution readiness branch, while other support divisions experienced significant staff shrinkage.
Workplace culture remains a top concern for the agency's watchdog, which has previously highlighted deficiencies in the FDIC's sexual harassment prevention program.
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"With significant staffing changes underway, the FDIC will need to assess its current staff skillsets against its statutory obligations and identify ways to address critical skill gaps," the OIG said Thursday. "As the FDIC undertakes that assessment, the FDIC should also continue to consider the standards necessary to ensure that the FDIC has an accountable workplace culture."
An independent report commissioned by the FDIC revealed a pervasive culture of sexual harassment, discrimination and misconduct within the agency. The investigation uncovered systemic issues — including a lack of accountability, power imbalances and a fear of retaliation — that allowed such behavior to persist.
The independent report, which included testimony from more than 500 employees, highlighted incidents of inappropriate comments, harassment and discrimination, especially toward women and marginalized groups. In response, FDIC Chair Martin Gruenberg apologized and committed to addressing the issues, though his leadership was questioned by some lawmakers.
For its part, the
Acting Chair Travis Hill said the FDIC is working to improve the workplace by stressing accountability.
"The FDIC also remains committed to successfully executing on its cultural transformation," Hill wrote in the annual report. "Most fundamentally, we must have a fair, credible, trusted process to hold employees accountable for misconduct. More broadly, we will continue our work to ensure a safe and accountable work environment for all employees."
Hill was appointed by President Donald Trump in January to the acting role, but it is not clear yet whether Hill will be nominated for the permanent position. Hill forecast the agency would pursue an active policy agenda focused on reforming the agency's approach to supervision, technology and innovation, as well as handling new bank charters and merger transactions.
"I expect that our reform agenda will promote a vibrant, growing economy, while still ensuring a safe and sound banking system," Hill wrote. "2025 will undoubtedly be a year of change and opportunity for the FDIC, and I am confident that the FDIC and its dedicated employees will remain focused on the FDIC's important mission and continue to proudly serve the American people."
