FDIC Once More in the Spotilight: Another Investigation Opens Into Leadership Misconduct

Things at the Federal Deposit Insurance Corporation (FDIC) just seem to keep getting worse. On Tuesday, it was reported that the FDIC's internal watchdog has opened still another investigation into misconduct at the highest levels of that quasi-governmental organization.

The FDIC’s inspector general is launching a pair of inquiries related to workplace misconduct at the agency, adding new scrutiny on the banking regulator following reports that it has long fostered a toxic work environment.
The inspector general’s office will conduct a special inquiry “to report on the leadership climate at the FDIC with regard to all forms of harassment and inappropriate behavior,” an IG spokesperson said. The watchdog will also review the FDIC’s sexual harassment prevention program.

You can read our previous coverage of the ongoing investigations at FDIC and the Consumer Financial Protection Bureau at these links:

The Wall Street Journal has also reported on this, describing the FDIC workplace misconduct as including "Strip Clubs, Lewd Photos and a Boozy Hotel." It is belaboring the obvious to point out that this kind of conduct, in any private corporation, would result in firings, lawsuits, and possibly prosecutions, but in a quasi-government "corporation?" While there are now at least three investigations underway, it remains to be seen whether any of them will result in so much as a pink slip. Given the recent utter failures to apply equal treatment under the law, it's understandable how one could be skeptical.

At least there is some indication that the persons under investigation, should the accusations prove to have merit - and there would appear to be an awfully lot of smoke for there not to be a fire someplace underneath at all - that someone will at least suffer career-ending consequences. The FDIC's problems would appear to be drawing some actual bi-partisan condemnation from Congress.

FDIC Chair Martin Gruenberg is facing pressure to resign from some Republican senators over the reports, which also alleged that he ignored bad workplace behavior and is known for his temper. Democrats on the Senate Banking Committee had called on the FDIC IG to investigate the agency’s workplace culture.

There are apparently, two major ways people view the law - or even standards of conduct. Some people understand that things like sexual harassment are illegal because they are wrong. Those people don’t obey the law for fear of punishment; they behave the way they do because it’s the right way to behave. And then there are some who believe that things like sexual harassment are wrong because they are illegal, and will presume that a certain position or level of power will allow them to get away with it. Some in the management at FDIC fall into that second group, and we can hope that they will be disabused of their notions. Others routinely get away with things like sexual harassment and even sexual assault because of the powerful who cover for them, which is why the second category exists.

The FDIC has reportedly declined to comment. Nobody should be surprised by that.