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Business: US bank regulator questioned about 'toxic culture' at agency | News

Business: US bank regulator questioned about 'toxic culture' at agency |  News

US lawmakers attacked the head of a major financial regulator for the second day in a row on Thursday over accusations that his agency failed to address workplace misconduct, including reports of discrimination and sexual harassment.

Republicans on the Senate Banking Committee have called on FDIC Chairman Martin Gruenberg to step down after an independent report found that the agency, which was created to protect bank deposits, failed to address workplace misconduct issues years ago.

Gruenberg has led the FDIC on and off since 2005, under both Republican and Democratic presidents, and was recently reappointed to the regulator's top job by Joe Biden.

“You should resign,” Republican Senator Tim Scott told Grunberg. “Your employees don't trust you.”

“This is not a single incident,” Scott added. “This spans more than a decade of your leadership of the FDIC.”

Democrats on the committee also criticized Gruenberg's leadership but stopped short of calling for his resignation — accusing Republicans of playing politics.

Senator Elizabeth Warren said: “President Grunberg, the Republicans who today called for your resignation are engaged in a purely political exercise,” accusing her colleagues of seeking to replace Grunberg with a certain Republican appointee.

“Your resignation will do nothing to improve the toxic culture at the FDIC, but it will give Republicans veto power over bank policy,” she added.

– Harassment and discrimination –

The FDIC commissioned the independent report, which was released last week, following allegations about its workplace practices in a series of articles published by The Wall Street Journal.

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“For too many employees and for too long, the FDIC has failed to provide a workplace that is safe from sexual harassment, discrimination, and other interpersonal misconduct,” the report’s authors found.

They said that an “isolated, risk-averse, paternalistic culture” contributed to persistent workplace misconduct at the FDIC, and that “pervasive fear of retaliation” led to underreporting of misconduct.

The report cited some examples, including one employee who said she feared for her physical safety when a colleague who was stalking her continued to text her even after she complained about him.

Some FDIC employees from underrepresented groups reported being told they were “token” employees to fill the quota, while other employees said they heard supervisors make homophobic remarks.

“The administration’s responses to allegations of misconduct, as well as the culture and circumstances that gave rise to them, were inadequate and ineffective,” the report’s authors said, adding that “cultural and structural change” was needed.

– Grunberg 'committed' to reforms –

The report also looked into reports that Gruenberg had a reputation within the FDIC for his temper, and found that some employees “continued to experience highly unpleasant exchanges during which he was ‘callous,’ ‘aggressive,’ and extremely ‘irritable.’”

Although Grunberg's behavior was not “the root cause of sexual harassment and discrimination at the agency,” workplace culture “starts at the top,” the report's authors said.

The report overshadowed Gruenberg's previously planned appearance in Congress this week to discuss regulation of U.S. banks.

“I accept the findings of the report, and as president I take full responsibility,” Gruenberg told lawmakers on Thursday, rejecting calls for his resignation.

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Gruenberg said he was “personally committed” to addressing the issues raised in the report and implementing its recommendations.

“Our employees are extraordinarily committed to the agency and its mission,” he said. “They deserve to have a workplace where everyone feels safe, valued and respected.”


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