After WSJ call out for 'toxic atmosphere' full of strip clubs, dick pics, & booze, the FDIC board of directors establishes special committee to oversee independent review of agency culture.

As we covered last week, the Wall Street Journal called out the FDIC's toxic work environment. Today, they announce an independent review of Agency Culture.

The Federal Deposit Insurance Corporation (FDIC) Board of Directors today announced the establishment of a special committee of the Board to oversee an independent third–party review of the agency’s workplace culture. The Board appointed Directors Jonathan McKernan and Michael J. Hsu to co–chair this special committee and issued the following statement:

“All employees at the FDIC need to feel safe and able to speak out if they are subject to, witness or encounter inappropriate behavior in the workplace.  Sexual harassment, discrimination, and other misconduct are totally unacceptable and have no place at the FDIC. 

“The FDIC Board is committed to fostering an environment and culture that promotes a safe, fair, and inclusive workplace for all FDIC employees.  The Board supports taking all actions necessary to identify and address the root cause of the problem and to promote accountability. Today, the FDIC Board unanimously approved the creation of an independent special committee of the Board, co–chaired by FDIC Directors Michael J. Hsu and Jonathan McKernan to oversee a third–party, agency–wide review.  The co–chairs may appoint up to three additional non–voting members, likely from outside the FDIC, to join the special committee to advise and promote a diversity of views. The review will be fully independent and those conducting it will report directly and exclusively to the special committee.

“This is a top priority for the FDIC Board Members. While this important work is underway, we recognize and appreciate the nearly 6,000 professionals who work at the FDIC, advancing its important mission of maintaining the stability and public confidence in the nation’s financial system.”

Statement by Chairman Martin J. Gruenberg on FDIC Board Creating a Special Review Committee

I support and welcome the action by the FDIC Board today establishing a Special Review Committee consisting of FDIC Board Members McKernan and Hsu to direct and oversee an independent, third–party review of the FDIC’s workplace and culture, and delegating to the Special Committee the full authority to do so. I will play no role in overseeing the review. I thank Board Members McKernan and Hsu for assuming this very important responsibility.

Statement by Vice Chairman Travis Hill on Establishment of Special Committee to Oversee Independent Review of FDIC Workplace Culture

I support the establishment of a Special Committee co–chaired by Directors McKernan and Hsu to oversee a third–party review of recent allegations of harassment and unprofessional conduct at the FDIC.  I have had a number of conversations with current and former employees over the past week that have reinforced the need for the review to be truly independent — to encourage those who have been subject to inappropriate conduct to participate, and for the results to be viewed credibly. 

To that end, the Board resolution approved last night includes several provisions that restrict the ability of FDIC management and FDIC Board members not on the Special Committee to engage with or influence the review.  I agreed to support the resolution in part due to the inclusion of these provisions. 

I know many employees, myself included, are proud to be associated with the FDIC and its mission.  But that is not something we should take for granted.  Pride and trust always and continually need to be earned, nobody is entitled to them, and I hope the FDIC comes out of this a better agency on the other side. 

It is great to see them finally responding--toxicity has no place in the workplace (unless you are System of a Down melting consenting folks faces) but do they have any idea just how awful this looks?

Booze, Strip Clubs, and Dick pics are where our 'Watchmen's" attention is affixed– all while the 5 banks failures (so far) this year on their watch that DWARF 2008 and 2009 in terms of total assets:

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Source: https://www.fdic.gov/bank/historical/bank/index.html

165 institutions failed between 2008-2009 with total assets of $544,468.2 million. Meanwhile, 'just' 5 failures this year have eclipsed that total ($548,705.0 million)

Again, our regulators at the FDIC (who are supposed to be the Watchmen of this 'sound and resilient' financial system seem way more interested in extracurricular activities (like booze, strip clubs, and dick pics) than doing their jobs.

FDIC leadership better hope this investigation is truly independent and has teeth that leads to real action if called for. Otherwise, how is the FDIC any different than the legend of Nero playing his fiddle while Rome burned in the background?

TLDRS:

• After WSJ call out for 'toxic atmosphere' full of strip clubs, dick pics, & booze, the FDIC board of directors establishes special committee to oversee independent review of agency culture.
  • All while the 5 banks failures (so far) this year on their watch that DWARF 2008 and 2009 in terms of total assets.
• Chairman Martin J. Gruenberg to play no role in overseeing the review.
• The Board resolution approved includes several provisions that restrict the ability of FDIC management and FDIC Board members not on the Special Committee to engage with or influence the review. 

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