Trump's DEI order collides with the FDIC workplace scandal

Bloomberg News

President Donald Trump issued a sweeping order last week to crack down on diversity, equity and inclusion initiatives at federal agencies and in doing so may have made it harder for the new leadership at the Federal Deposit Insurance Corp. to dig out from the workplace-harassment scandal that has dogged the agency for the last year.

Trump's order calls on federal agencies to "coordinate the termination of all discriminatory programs, including illegal DEI and 'diversity, equity, inclusion, and accessibility' (DEIA) mandates, policies, programs, preferences, and activities in the federal government, under whatever name they appear." Shortly thereafter, the Office of Personnel Management — the federal government's human resources department — issued a memo to the agencies asking them to identify departments and sub-units that are "exclusively" focused on DEI and to put those offices' employees on paid administrative leave while their offices are closed.

"[Agency equity action plans] demonstrated immense public waste and shameful discrimination," the executive order reads. "That ends today. Americans deserve a government committed to serving every person with equal dignity and respect, and to expending precious taxpayer resources only on making America great."

The OPM memo went a step further, noting in a letter template for federal supervisors to use that OPM is "aware of efforts by some in government to disguise these programs by using coded or imprecise language," and that federal workers who are aware of any effort to "obscure the connection between the contract and DEIA or similar ideologies" should report that activity to the office within 10 days.

"There will be no adverse consequences for timely reporting this information," the letter template said. "However, failure to report this information within 10 days may result in adverse consequences."

It is difficult at this point to judge precisely how much of a load the "coded or imprecise language" and "similar ideologies" phrasing is meant to bear, but to understand the risks of issuing such a sweeping statement, one must first understand what DEI is meant to accomplish. 

The presumption of DEI, at least as far as it relates to the workplace, is that a diverse and inclusive workforce does a better job of serving the public than a homogenous one that is hostile to disfavored groups. By excluding potential or actual employees from diverse backgrounds — either overtly or casually — an institution could be resisting changes that could benefit the institution and its mission.

That problem of exclusion and retaliation is already evident at the FDIC, according to news reports and an independent review commissioned by the agency released last year. I won't rehash the lurid details, but suffice it to say the agency thought the substantiated complaints were numerous and severe enough that it set up two new offices — the Office of Professional Conduct and the Office of Equal Employment Opportunity — to address the problem.

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The FDIC confirmed that the Office of Minority and Women Inclusion — an office established at each of the financial regulators as part of Dodd-Frank — has been identified as a DEI office per the OPM memo, but the agency could not say whether any additional offices would ultimately be identified or were being considered. Some portion of the OMWI staff have been placed on paid administrative leave, as directed by the OPM memo, the FDIC said. The OPC and the OEEO aren't explicitly meant to deal with diversity per se — the offices are more oriented toward processing and addressing employee complaints — but even so, the broad brush of the OPM memo makes it conceivable that its activities could be curtailed or redirected by the executive order.

That could make cleaning up the FDIC's act — already an unenviable task — that much more complicated. Rooting out harassment where it is endemic is difficult, but rooting it out while also avoiding the appearance of promoting diversity and inclusion seems impossible.

To his credit, acting FDIC Chair Travis Hill seems willing to try. In a recent statement, Hill listed 15 priorities for his tenure as acting chair, including — at the very bottom — a commitment to "re-establish a strong workforce culture, where misconduct is not tolerated and those who engage in misconduct are held accountable."

Misconduct, of course, is generally assumed not to be tolerated anywhere, but since it clearly is at the FDIC, not tolerating it is a good start. But simply firing or penalizing workers for instances of harassment is an inefficient way of turning a workplace culture around because you're not addressing the underlying workplace culture from which the harassment arises. Changing the culture of a place means you have to give workers a vision for where you want to go — the goals must be articulated. And if punishing wrongdoers is the beginning and end of your approach, the goal for bad actors is clear: Don't get caught.