WASHINGTON — Following a scandal that drew wide media attention, the Federal Deposit Insurance Corp. has announced the conclusion of independent oversight of its workplace reforms, marking a milestone in efforts to address sexual harassment, discrimination and other misconduct exposed by The Wall Street Journal and a subsequent outside investigation.
Carrie H. Cohen of Morrison & Foerster LLP, retained by the FDIC board to independently monitor and audit the agency’s implementation of workplace culture reforms, has completed her assignment, the agency said.
The monitorship followed recommendations from an independent review by Cleary Gottlieb Steen & Hamilton LLP. Cohen and her team assessed the FDIC’s reform efforts and provided feedback throughout the engagement.
The FDIC said it has implemented substantial reforms addressing problems identified in the Journal’s 2023 reporting and the Cleary Gottlieb review. According to the agency, misconduct allegations now are rigorously investigated and employees who commit misconduct are held accountable.
Reporting Exposed Misconduct
The Journal’s reporting described women being sexually propositioned and followed to their hotel rooms during bank examination trips, with few consequences for supervisors’ behavior. Its investigation drew on employee interviews and records, including complaints, emails and internal documents.
Examples documented in the Journal’s investigation and its subsequent coverage included:
- A San Francisco supervisor invited employees to a strip club.
- A Denver supervisor had sex with an employee, discussed it with colleagues and pressured her to drink whiskey at work.
- Senior examiners sent female employees photographs of their genitals. The Journal reported that the men described in those accounts remained employed by the agency.
- Heavy drinking at the FDIC’s training hotel outside Washington included people vomiting in an elevator and urinating from the roof.
- A Hispanic employee was asked to recite the Pledge of Allegiance to demonstrate that the employee was American.
- Executives known for pursuing relationships with subordinates received promotions or transfers rather than discipline, according to the independent review covered by the Journal.
The Cleary Gottlieb investigation gathered accounts from more than 500 employees and produced a 234-page report, the Journal reported.
Leadership Changes And Accountability
The FDIC said its leadership has undergone substantial changes, including complete turnover of its board, widespread changes among senior officials and new directors leading most divisions, offices and regional offices.
Agency leaders are expected to model respectful, professional behavior and encourage employees to share ideas, consider differing viewpoints, listen to one another and collaborate, according to the announcement.
The FDIC also said it has fully implemented all recommendations from its Office of Inspector General’s 2024 audits concerning workplace culture. The inspector general has formally closed those recommendations, the agency said.
‘Far Too Many Employees for Far Too Long’
Chairman Travis Hill recalled the Cleary Gottlieb report’s finding that, “for far too many employees and for far too long,” the agency had failed to provide a workplace safe from sexual harassment, discrimination and other interpersonal misconduct. The review also identified a patriarchal, insular and risk-averse culture that contributed to those conditions.
“Since then, we have taken dramatic steps to transform the agency’s culture, and the conclusion of the independent monitorship is an important milestone in these efforts,” Hill said.
Hill credited Cohen and her team with providing oversight and engaging employees during implementation of the reforms.
“The FDIC remains committed to sustaining this progress and maintaining a workplace where employees are treated with professionalism and respect, where employees are proud to work, and where potential recruits want to work,” he said.
Responsibility Returns To Agency
Cohen said the monitor’s independent assessment of the FDIC’s reform design and engagement throughout the agency helped establish the elements needed for lasting change.
“As the monitorship concludes, responsibility for carrying these reforms forward rests with the FDIC,” Cohen said. “The agency is well positioned to carry out this work with a strong foundation and demonstrated commitment to the work ahead.”
