Strip Clubs, Lewd Photos and a Boozy Hotel: The Toxic Atmosphere at Bank Regulator FDIC Employees say sexual harassment, misogyny pervade federal agency tasked with ensuring stability of nation’s banks, driving women to leave Kelsi Foutz was a bank examiner at the FDIC until last year. The federal agency’s hotel, left, where employees stay during training, has been a party hub. PHOTO ILLUSTRATION: ALLISON PASEK/WSJ; PHOTOS: HAIYUN JIANG FOR WSJ, LINDSAY D’ADDATO FOR WSJ, STOCK By Rebecca Ballhaus Updated Nov. 13, 2023 5:14 pm ET 834 RESPONSES Explore Audio Center A male Federal Deposit Insurance Corp. supervisor in San Francisco invited employees to a strip club. A supervisor in Denver had sex with his employee, told other employees about it and pressed her to drink whiskey during work. Senior bank examiners texted female employees photos of their penises. All of the men remained employed at the agency. A toxic work environment at the FDIC, one of the nation’s top banking regulators, has for years caused employees to flee from an agency they say enabled and failed to punish bad behavior, according to a Wall Street Journal investigation based on interviews with FDIC employees as well as legal filings, union grievances, Equal Employment Opportunity complaints, emails, text messages and other internal documents. A cultural reckoning on sexual harassment, sexism in the workplace and the #MeToo movement has transformed offices in recent years. Yet the FDIC continues to show a hesitance to impose harsh discipline on managers accused of misconduct, employees said. Female examiners left the FDIC because of what they say was a sexualized, boys’ club environment and the belief they were consistently given fewer opportunities than their male counterparts, according to interviews with more than 100 current and former employees, including more than 20 women who quit. While traveling to banks across the country, where regulators are meant to evaluate banks’ financial stability and compliance with regulations, male examiners talked openly about female colleagues’ appearances. A former female employee recalled her male colleagues saying women needed to use sex to get ahead at the FDIC, as they stared at her. The agency tolerated a heavy drinking culture. The FDIC’s 11-story hotel outside Washington, where out-of-town employees stay when attending training, was a party hub, where people have vomited in the elevator and urinated off the roof after nights of heavy drinking. The carousing spawned an Instagram account that posted in 2021: “If you haven’t puked off the roof, were you ever really a FIS?”—referring to a bank examiner-in-training. On Monday, after this article was published online, FDIC Chairman Martin Gruenberg said that in response to the Journal’s investigation the agency has hired the law firm BakerHostetler to look into alleged harassment and discrimination, according to a video sent to staff. Gruenberg said the law firm would conduct a “top-to-bottom assessment” and that changes would be implemented if they were determined to be needed. In 2020, the agency’s inspector general found the FDIC’s policies for preventing, identifying and disciplining sexual harassment fell short. It called the agency’s tracking of misconduct allegations “decentralized, untimely, incomplete, and inaccurate.” It said the agency wasn’t able to identify all the allegations of sexual misconduct employees had made and was unable to track patterns of harassment by individuals or in certain offices. The FDIC agreed to changes but disagreed with the IG’s conclusion that its antiharassment program was inadequate. The FDIC told the Journal it hasn’t identified issues related to sexual harassment since 2020 in listening sessions, annual surveys, exit surveys and meetings with employee resource groups. An FDIC official said, “Harassment in any form is contrary to the FDIC’s values and our deep commitment to fostering a diverse and inclusive workplace.” She said the agency has training, reporting and oversight programs aimed at creating a “safe and equitable environment where all employees can feel valued and respected.” When the agency identifies misconduct, “we investigate and take appropriate action,” she said. The agency seeks employees’ input on how to improve the culture through a variety of employee resource groups and will “continue to conduct periodic reviews” of its programs and policies, she said. Lauren Lemmer’s former ID badges. She quit before finishing the training to become a bank examiner. PHOTO: CAITLIN O’HARA FOR THE WALL STREET JOURNAL Reports of the agency’s problems stretch back more than a decade and have persisted through changes in leadership, administrations and internal investigations. “It was just an accepted part of the culture,” said Lauren Lemmer, a former examiner-in-training. She quit her job in 2013 after three years in which she said she was denied opportunities to advance, followed back to her Dallas hotel room by a male colleague during training, invited to a strip club in Seattle by other bank examiners and sent an unsolicited naked photo by a colleague. Many employees didn’t file complaints about their harassment, fearing retaliation or believing nothing would come of it. When people did complain, the FDIC in multiple instances investigated and substantiated complaints but moved the perpetrators to other offices instead of firing them, which for federal employees can be a difficult process. The FDIC declined to respond to detailed questions about employees’ drinking, specific employees’ claims of harassment and descriptions of sexualized or inappropriate work environments. The ‘Wild West’ Current and former employees across the country described a pernicious culture for staff in the FDIC’s regional offices exacerbated by the relative freedom of bank examiners traveling for days or weeks at a time. Some called life on the road the “Wild West.” One of the female examiners who received a photo of a colleague’s penis was traveling with a team to conduct a bank exam in North Carolina in 2018, according to a text message reviewed by the Journal. She decided to avoid a confrontation about it because the team was staying at the same hotel and working closely together, she said. Another examiner, Neha Singh, joined the FDIC’s San Francisco office in 2017 as a trainee, her first job out of college. She was immediately sent out on the road, a typical assignment for trainees. For examiners in some offices, that could mean traveling as many as 100 nights a year, often with all- or mostly male teams, although travel has been reduced somewhat since the pandemic. At first, Singh, eager to make friends in a new city, attended team happy hours and spent time with colleagues outside of work. Eventually, she began withdrawing from the FDIC social scene. She continued to feel pressure from her colleagues to come out drinking every night, particularly while traveling, she said. Examiners accused her of ignoring them when she declined to drink with them. She said one told her, “You seem a little arrogant.” When Singh did join the team for a drink, she believed her male colleagues were tracking how many glasses of wine she drank and urging her to drink more. “I felt really taken advantage of in a moment where I was totally vulnerable,” she said. FDIC headquarters in Washington. PHOTO: HAIYUN JIANG FOR THE WALL STREET JOURNAL Singh quit the FDIC in 2022, in her first year after earning her commission, the designation needed to be a full-fledged examiner. She said she was explicit with senior managers in the office that she was leaving because of what she viewed as a culture of harassment and misogyny. One manager told her they had heard similar concerns from other women and knew it was a problem, she said. The culture that employees described is a drastic departure from the staid nature of the FDIC’s mission. The independent federal agency of fewer than 6,000 employees works to maintain stability and public confidence in the U.S. banking system. It insures deposits and handles the resolution of failing banks. The agency is funded by insurance premiums paid by banks instead of the federal budget. It has historically drawn congressional interest primarily in response to bank crises. The agency has been under renewed scrutiny following the major failures this spring of Signature Bank , First Republic Bank and Silicon Valley Bank. An internal review cited the FDIC’s struggles to retain examiners as part of the reason it didn’t detect problems with some of the failed banks earlier. About 60% of examiners were men in 2022, down from around 66% in 2004, according to the agency’s annual diversity reports. Men made up 65% of executive management positions last year, up from 63% the previous year, according to the reports. Trainees receive frequent performance ratings from the employee leading each exam, which affect the kinds of assignments they receive going forward. Current and former employees said that system intensified the pressure to be part of the in crowd and made them even more reluctant to file complaints, fearing their reviews would drop if they were labeled as difficult. Kelsi Foutz, a senior risk management examiner who worked in Salt Lake City and San Francisco, said she received a negative performance review in 2018 after an assignment with another office, despite consistently good feedback during the six-week stint. Foutz said a senior colleague suggested she not raise it with the reviewer, telling her the man “is just intimidated by tall, beautiful women.” Two male managers advised her to “just smile and make him feel good,” she said. Foutz said she became fed up with the culture and feeling like opportunities weren’t available for her. PHOTO: LINDSAY D’ADDATO FOR THE WALL STREET JOURNAL She first experienced the FDIC’s sexualized culture just after joining the trainee program in 2013, when she was 21 and working in a different office. During lunch with an examiner she had become friendly with, he complained to her about his marriage, telling her he wasn’t having enough sex, she said. “Obviously if I walked into this office and you were naked, I’d f— you right here,” she said he said. She was so stunned that she didn’t say anything and never filed a complaint. “For the longest time, I didn’t have any perspective,” she said. “It was just normal. You deal with it.” Foutz quit last year, saying she was fed up with the culture and feeling like opportunities weren’t available for her. Boys’ club Multiple women said they were repeatedly passed over for assignments to lead bank exams—and then penalized in performance reviews for not having led any bank exams. Trainees are heavily dependent on their supervisors to assign them the exams they need to ultimately earn their commission. Many women said they felt their male colleagues were able to progress more quickly, in part because they would go golfing and out drinking with their supervisors—and then get plum assignments. Lemmer joined the FDIC’s Roseville, Calif., office in 2010 as an examiner-in-training. On the road, senior bank examiners would make comments about her appearance and indicate they were skeptical she intended to stay at the FDIC long-term, she said. Her supervisor, Trevor McIntosh, referred to her as a male colleague’s girlfriend—they weren’t dating—and asked her colleague during golf outings about Lemmer’s sex life, including asking who at the agency was sleeping with her, she said the colleague told her. Lemmer quit for a job in the private sector before she had finished training to become an examiner because she didn’t see a way to improve her situation. She never filed a complaint, but when she left she told the field supervisor, Andrea Davis, and human resources about her experience, telling them of McIntosh: “He is a problem.” She said she never heard from them again. Lemmer said she was denied opportunities to advance, followed back to her Dallas hotel room by a male colleague during training, invited to a strip club in Seattle by other bank examiners and sent an unsolicited naked photo by a colleague. PHOTO: CAITLIN O’HARA FOR THE WALL STREET JOURNAL McIntosh’s leadership also rankled other women, who said they felt disadvantaged by a boys’ club environment where McIntosh would hang out with male employees, including at one point visiting a strip club together. In 2015, an examiner and a union steward, Kevin Burnett, said he raised concerns he had heard about McIntosh—including from Lemmer—with Davis, who asked him to talk directly to McIntosh about the problems. After he spoke with McIntosh, Burnett received a $20 gift certificate for a coffee shop as a thank you. “Thanks so much for talking with me about your concerns!” read the card, written by Davis and signed by McIntosh in another color ink. “You have demonstrated the FDIC values in the best possible way.” McIntosh in an interview said he came to Roseville from an FDIC office where supervisors were “blurring the lines between who’s a manager and who’s an employee,” and said he brought that style with him because he had responded well to it. He said he tried to be inclusive in arranging after-hours activities including golf, soccer and dinners and that he sees himself as a “social coordinator.” When Davis, Burnett and others brought concerns to him, he wrote a four-page memo to Davis outlining how he would improve his communication style, he said. Referring to Lemmer as her colleague’s girlfriend was “completely inappropriate,” he said, but he denied making any sexual comments and said he didn’t recall Burnett raising those comments to him. McIntosh acknowledged going to a strip club with male employees after hours while they were traveling but said he didn’t recall it being raised as an issue and that he didn’t know why it would have been. He said that after the 2015 discussions with Davis and Burnett, he didn’t hear concerns about his conduct again and said he took that as a sign that “the steps I had taken to improve my communication style throughout the office were productive.” He remained in his job as a supervisor until December 2022, when he moved to a nonmanagerial role of similar seniority. He said he applied for the job to improve his work-life balance. Davis didn’t respond to requests for comment. Personnel churn Resignations of examiners-in-training more than doubled in 2021 to 54 from 24 the previous year, and rose to 62 in the first nine months of 2022, the FDIC’s IG said in a February report, without citing any causes. The agency hires fewer than 200 trainees every year. Only 48% of the class of examiners hired in 2017 remain at the agency, according to numbers provided by the FDIC. The personnel churn is expensive—it costs about $400,000 to train a commissioned examiner over four years, according to the IG. The FDIC said its data show that since 2015, female examiners have left the agency at similar and sometimes lower rates compared to male examiners. Last year, 12.2% of female examiners left the agency, compared to 11.8% of male examiners. The agency, however, has highlighted its struggle to attract and retain female examiners in every annual diversity report since 2011. In some offices, particularly those that required less travel, employees said they found the environment professional and didn’t experience inappropriate behavior or harassment. The FDIC has more than 80 office locations, and current and former employees said many of the regions operate as their own fiefdoms, meaning a regional or field office’s culture depends heavily on the people in charge. Randal Ditch, a supervisory examiner in Denver, was demoted in 2014 to a nonsupervisory examiner position in Tulsa, Okla., after having sex twice with a subordinate female employee and a number of other rule violations, according to records of his case before the Merit Systems Protection Board, an independent panel that hears appeals from federal employees over personnel decisions. Ditch had urged the woman to not “be a pussy” and drink a shot of whiskey during working hours, the records show. He also told the woman, after she rebuffed him, that he had feelings for her and was going to try to reassign her. He told another subordinate employee that he had slept with the woman, the records indicate. In deciding to demote Ditch rather than hand down a harsher penalty, the agency considered mitigating factors including his “25 years of satisfactory performance,” lack of disciplinary record and that he “got along with fellow co-workers.” Ditch appealed his demotion, denying he committed the alleged misconduct and saying the discipline was “too severe,” according to documents provided to the Journal in response to a public-records request. The MSPB denied his petition in February 2023. Ditch didn’t respond to requests for comment. He left the agency this year. Depending on the nature of the complaint, “if they don’t believe a manager at a field office or a regional office was doing the right thing, rather than fire them, they may move them, to give them another chance,” said Glen Bjorklund, a former senior human-resources official at the FDIC who left in 2011. Kevin Burnett, a former examiner and union steward, said he received this note after raising concerns about a supervisor. PHOTO: KEVIN BURNETT An examiner-in-training complained about harassment from Jim Kiss, a field supervisor in San Francisco, to his trainee liaison as early as 2014, according to an email reviewed by the Journal. Kiss remained in charge until this summer, when multiple employees further complained to management, according to current and former employees. Kiss remarked on employees’ appearances, made homophobic and harassing comments and talked about his drug use in the office, former employees said. He bragged about his sex life and talked about the importance of sex in keeping a marriage strong. Management had started looking into the working environment in the field office in 2022, a former FDIC official said. This summer, after the Journal began speaking with women about Kiss’s behavior, he was moved to a temporary position of acting case manager. He is currently on leave. Internal investigators are looking into Kiss’s leadership, according to current and former employees. Kiss didn’t respond to requests for comment. Also in San Francisco, multiple employees in 2013 complained to management that field supervisor Hien “Jimmy” Nguyen made sexist and discriminatory comments, according to former employees, emails, texts and an EEO complaint reviewed by the Journal. Nguyen suggested a female employee who had recently earned a new compliance certificate should get her “Mrs.” designation next. He made sexual comments about women’s appearances. He described gay men in the office as “my little princesses” and invited male employees to a so-called sex cafe that the city of San Jose later cracked down on, according to employees and documents. The FDIC demoted him to an examiner position and moved him to the agency’s office in Raleigh, N.C., telling employees he was going to spend more time with his family, former employees said. “It was my error and lack of judgment,” Nguyen said in an interview. “I moved on, and I’ve learned from it.” He said he felt his punishment was harsh and described the experience as traumatic. He said the establishment to which he invited employees wasn’t a sex cafe and “more of a club/strip joint.” Three years after he was transferred, Nguyen got a job at the Office of the Comptroller of the Currency, another federal bank regulator, and is now a manager there. “People came forward with horrific allegations that were substantiated about treatment of women and marginalized people,” said Burnett, who was among those who complained. “There was no recognition that we were mistreated, no recognition that it was wrong, no recognition that the environment they placed us in was inappropriate.” Drinking on the roof The agency’s IG report in 2020 cited a survey the IG conducted in 2019 that found 8% of more than 2,300 respondents said they had been sexually harassed. Some 38% of those harassed said they didn’t report the incidents for fear of retaliation. The FDIC received 12 allegations of sexual harassment from 2015 to 2019, the report said. In response, the agency agreed to improve training and tracking of allegations and required preventive or corrective action to be taken within 60 days of receiving notice of a report of harassment, among other changes. The FDIC’s deputy to the chairman and chief operating officer at the time, Arleas Upton Kea, said in the response to the IG that the percentage of employees who had experienced sexual harassment was “well below the government average.” She added that the IG’s report “ignores the possibility” that employees might want to address their complaints in a more informal way. In 2021, a survey by the MSPB arbitration panel found that 18% of female FDIC employees reported having experienced some form of sexual harassment in the previous two years, four points higher than in its previous survey in 2016. The FDIC training campus in Arlington, Va. PHOTO: HAIYUN JIANG FOR THE WALL STREET JOURNAL A center of the FDIC’s party culture was the agency’s hotel. The FDIC spent more than $100 million in the 1980s to build a training complex in Arlington, Va., that included a hotel for agency staff with more than 350 rooms, an outdoor pool and a rooftop patio. The FDIC said the hotel and training complex save the agency money. Employees, from new hires to supervisors, often gathered on the roof for drinks, buying alcohol at the nearby liquor store. Some employees joked that the hotel is like an embassy: If they can get back to the hotel after creating chaos at nearby bars, they’ll be fine. Trips to the complex eased during the pandemic but have rebounded since then, with employees as recently as this summer drinking on the roof and hitting nearby bars before arriving hungover at training the next day, a current employee said. The FDIC said if it learned an employee was habitually drinking intoxicating beverages it would be grounds for a personnel investigation and potential removal. One FDIC employee lived near the hotel and said she gave the hotel staff her number in case of emergency. She said in recent years until she left the agency, she on multiple occasions received late-night calls that required her to run over and deal with the employees stumbling back in. On two occasions, she said she had to make sure employees didn’t need to go to the emergency room. In 2016, an examiner-in-training was charged with driving under the influence when he was found passed out behind the wheel of a running vehicle outside the FDIC hotel, according to police records. He pleaded guilty, paid a fine and had his license suspended. Two years earlier, an examiner who taught a compliance class to employees was arrested at the hotel past midnight after throwing a party in his room, where he became so inebriated that other employees felt they were being held hostage as security repeatedly called the room, according to current and former employees. He was charged with public intoxication, pleaded guilty and paid a fine, court records show. Neither man was fired.
I think they should test for alcohol if they're going to test for drugs it's one of the stupidest drugs of them all
That is the root of the problem right there. The agency that's supposed to supervise and oversee the banking industry lives in the pockets of the banks that they are supposed to oversee. It's like having sheeps guarded by the wolves. If you have the FDIC instead funded by consumer advocacy groups or investment industries, I don't think these groups would tolerate drinking on the job or visiting strip clubs on their money and appreciate such high turnover and difficulty in retaining qualified bank examiners. And this sexualization of the working environment against women would stop in no time. It's going on right now because they know they are not expected to do a good job; they are being paid to just coast on their job.
The FDICs function is so basic it boggles the mind while they even need people to carry it out in the first place. Well I guess they do a little more than just that function.. The Federal Deposit Insurance Corporation (FDIC) serves several critical functions in the U.S. financial system: 1. **Insuring Deposits**: As you mentioned, the FDIC insures deposits at member banks, currently up to $250,000 per depositor, per insured bank, for each account ownership category. 2. **Maintaining Stability**: The FDIC helps maintain stability in the U.S. financial system, especially during economic crises. By insuring deposits, it reduces the likelihood of bank runs where depositors rush to withdraw their funds, fearing the bank might fail. 3. **Supervising Financial Institutions**: The FDIC supervises and examines banks to ensure they adhere to sound banking practices, reducing the risk of failure. This includes evaluating their financial condition, management practices, and compliance with laws and regulations. 4. **Managing Bank Failures**: In the event of a bank failure, the FDIC acts as the receiver. This means it handles the process of selling off the bank's assets, settling its debts, and distributing any remaining proceeds to the bank's creditors. 5. **Consumer Protection**: The FDIC also works to protect consumers in the banking system. This involves educating consumers about their rights and ensuring banks treat customers fairly. 6. **Risk Monitoring**: The agency monitors and addresses risks to the deposit insurance funds and to the broader financial system. The FDIC plays a pivotal role in maintaining public trust and confidence in the U.S. financial system, especially in the context of protecting depositors and ensuring the health and stability of the banking sector.
How can incompetency to such a degree that the silicon valley bank crash scandal around March of this year was not like a known event, it was so mismanaged it's insane how does something like that slip by?
Cuz they are all busy going to strip clubs, puking on the roof and ogling at their female colleagues...
How can they do No. 3 and No. 6 properly when they are being paid by the banks? Biggest conflict of interest if you ask me.