A plan for dealing with accountability over sexual harassment allegations at the federal bank deposit insurance agency was approved by a 3-2 vote of the agency’s board late Wednesday – leading to dueling statements from board members on both the pro and con side of the plan.
The split was clearly along partisan lines, with Democratic appointees voting in favor of the plan, and Republican appointees against.
Acting Comptroller of the Currency Michael Hsu (who, as leader of the national bank regulator Office of the Comptroller of the Currency (OCC) sits on the board of the Federal Deposit Insurance Corp. (FDIC)) issued a 665-word statement Thursday in support of the plan. Hsu said the plan promotes accountability at the FDIC “by ensuring that independent, third-party investigations of executives and Board members can proceed immediately.”
He noted, however, that those investigations will proceed after the FDIC’s Office of Professional Conduct (OPC) and Office of Equal Employment Opportunity (OEEO) become operational.
Board Member Jonathon McKernan – a Republican appointee to the board — issued a 1,665-word statement late Wednesday, following the meeting of the FDIC Board. He blasted the board’s decision and decried the rejection (by a 2-3 vote) that rejected his own proposal to address accountability. McKernan said that, under his plan, a committee would oversee independent inquiries by outside investigators of existing and future allegations of misconduct by FDIC executives.
The controversy revolves around the agency board’s response to allegations of sexual harassment that surfaced publicly last fall. In May of this year, a report by a special panel of the FDIC Board prepared by the New York- and D.C.-based law firm Cleary Gottlieb Steen & Hamilton LLP, and overseen by the panel found a failure to provide a workplace safe from sexual harassment, discrimination, and other interpersonal misconduct went on “for far too many employees and for far too long.”
The report placed responsibility for the misconduct and culture directly at the top – with the office of the board Chairman Martin Gruenberg. Although the report made no recommendation for Gruenberg’s removal or disciplining, Gruenberg on May 20, announced he would step down as chairman as soon as the Senate confirmed a successor.
In June, President Joe Biden (D) nominated Christy Goldsmith Romero, a Wall Street regulator and former Treasury Department official, to succeed Gruenberg. The Senate has yet to vote on the nomination.
According to Hsu, the plan adopted by the FDIC Board “provides a fair means for Cleary Gottlieb to share information regarding allegations against FDIC executives and Board members with independent investigators, while protecting the confidentiality and anonymity of those who engaged in the Cleary Gottlieb review.”
Hsu also said that the board the “voted unanimously to hire a Third-Party Expert who will advise the Board on the agency’s transformation efforts.”
McKernan, for his part, called the plan adopted as “convoluted and complicated” which he said would require another federal agency (he named the National Credit Union Administration (NCUA) or the General Services Administration (GSA)) “to retain investigators to maybe someday, somehow, sort of investigate some subset of those allegations on behalf of the FDIC.”
“There is instead apparently a strongly felt desire among some to avoid a second report documenting misconduct by FDIC executives,” McKernan alleged.
McKernan narrowed his criticism to Gruenberg, alleging that a recent survey by the FDIC’s employee union found that “68% of FDIC employees have no confidence in the Chairman or the executive team’s ability to correct the FDIC environment.”
Acting Comptroller issues statement promoting accountability at the FDIC
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