FDIC chairman Martin Gruenberg said Monday that he will continue to work on "the transformation of the FDIC’s workplace culture" until a new leader is confirmed. Kevin Dietsch / Getty Images
FDIC chairman resigns following toxic workplace allegations
Martin Gruenberg said in a brief statement that he will remain at the agency until a successor is confirmed by the Senate, following calls from lawmakers for him to resign due to systemic harassment claims at the regulator.
After a firestorm of controversy that included agencywide sexual harassment allegations and toxic work culture, Federal Deposit Insurance Corporation Chairman Martin Gruenberg said Monday that he would resign upon the appointment of a successor.
“It has been my honor to serve at the FDIC as Chairman, Vice Chairman and Director since August of 2005. Throughout that time I have faithfully carried out the critically important mission of the FDIC to maintain public confidence and stability in the banking system,” Gruenberg said in a brief statement. “In light of recent events, I am prepared to step down from my responsibilities once a successor is confirmed. Until that time, I will continue to fulfill my responsibilities as Chairman of the FDIC, including the transformation of the FDIC’s workplace culture.”
Gruenberg had been under fire for months following an independent report that the agency had failed to foster an environment free of “sexual harassment, discrimination and other interpersonal misconduct.”
The Wall Street Journal, which broke news of widespread harassment allegations within the FDIC in November 2023, was also the first to report Gruenberg’s impending resignation on Monday.
Following the November 2023 story, the FDIC Board of Directors formed a Special Review Committee to oversee a third-party report of the agency’s workplace culture.
The report, conducted by law firm Cleary Gottlieb, found “that a patriarchal, insular, and risk-averse culture has contributed to the conditions that allowed for this workplace misconduct to occur and persist, and that a widespread fear of retaliation, as well as a lack of clarity and credibility around internal reporting channels, has led to an under-reporting of workplace misconduct over the years.”
While the report also noted that FDIC management’s responses to the allegations were insufficient and ineffective, leading to several recommendations to correct course, a member of the Special Review Committee told Government Executive the recommendations didn’t go far enough.
“When something has gone on as long as this went on, and was as egregious and widespread as this behavior was, the response has to be really very convincing that leadership takes it seriously. And I think that without these accountability mechanisms, it doesn't. It doesn't really demonstrate the level of seriousness that I think the FDIC must take,” said committee member Linda Miller, who also leads a consultancy focused on fraud prevention.
The report also criticized Gruenberg personally for instances where he “[lost] his temper and [interacted] with staff in a demeaning and inappropriate manner.”
The chairman — who previously served in the role from 2012 to 2018 before being appointed again in 2023 — told the House Financial Services Committee last week that he apologized to agency employees who were sexually harassed or experienced other misconduct.
“I also acknowledge my own failures as chairman both in failing to recognize how my temperament in meetings impacted others and for not having identified the deeper cultural issues at the FDIC sooner,” he said, but argued that changing leadership would not advance ongoing reform efforts.
However, committee Republicans, including Chairman Patrick McHenry, R-N.C., and at least one Democratic member called for Gruenberg’s resignation.
Senate Committee on Banking, Housing, and Urban Affairs Chairman Sherrod Brown, D-Ohio, followed suit on Monday in calling for Gruenberg’s resignation in a statement.
“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,” he said. “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. That’s why I’m calling on the President to immediately nominate a new chair who can lead the FDIC at this challenging time and for the Senate to act on that nomination without delay.”