WASHINGTON, D.C. — Dennis M. Kelleher, Co-founder, President, and CEO of Better Markets issued the following statement in advance of a House Financial Services Committee hearing with financial regulators, including the Chair of the Federal Deposit Insurance Corporation (FDIC).

“There would be no FDIC scandal, no FDIC special committee, no FDIC law firm report, no Wall Street Journal articles, and no calls for the current Democratic FDIC Chair to resign if former Republican FDIC Chair Jelena McWilliams and her leadership team, including current Republican FDIC Vice Chair Travis Hill, had fully and properly responded to the FDIC Inspector General’s (IG) two-year investigation into sexual harassment and the IG’s extensive 65-page report entitled ‘Preventing and Addressing Sexual Harassment,’ which was issued on July 10, 2020 (IG’s Report).  If they had done their jobs in 2020, the sexual harassment and toxic work environment should have and almost assuredly would have ended in 2020. The reason that did not happen is because of former Chair McWilliams’ and her leadership team’s mismanagement and failure to take the appropriate action on the IG’s Report.

“For example, rather than treating the IG’s Report and its allegations with the seriousness and urgency they demanded, former Chair McWilliams and her leadership team did not accomplish one of the IG’s recommendations by the time the report was issued in July 2020, despite being aware of those recommendations well before the IG Report was released. Former Chair McWilliams and her leadership team were aware of the two-year investigation for a long time, had been provided a draft of the IG’s Report in May of 2020, had responded in writing in June 2020, and yet still had done little if anything by the time the report was issued in July 2020.

“Highlighting the degree of failure in 2020, rather than taking those 2020 allegations and instances of sexual harassment seriously and taking action, former Chair McWilliams and her leadership team disagreed with the recommendation of the IG’s Report to ‘implement a strategy’ to create and maintain a ‘culture in which harassment was not tolerated’ and to ensure that all harassment complaints were ‘promptly’ reported investigated and resolved. Instead, former Chair McWilliams and her leadership team said that such a strategy was not needed in 2020 because

‘the FDIC currently has a robust, multi-faceted strategy in place designed to promote a culture of diversity, inclusivity, and an environment in which harassment is not tolerated.’

“This was, of course, tragically inaccurate. Former Chair McWilliams and her leadership team should not have rejected that recommendation by the IG. They should have implemented it quickly and fully.  If they had done so, it is difficult to see how the sexual harassment and inappropriate workplace conduct could have continued beyond 2020.

“Obviously, the claimed basis of former Chair McWilliams and her leadership team for rejecting the IG’s recommended strategy was utterly wrong, as made clear by the report of the law firm hired by the FDIC Special Committee (SC Report). While that law firm was seriously conflicted and its report was biased, incomplete, and misleading, it unquestionably shows the exact opposite of what former Chair McWilliams and her leadership team claimed regarding sexual harassment and a toxic work environment in and after 2020.

“Yet, the SC Report in 234 pages failed to detail the involvement and responsibility of former Chair McWilliams and her leadership team and failed to mention their management failures. Instead, the SC Report puts virtually all the blame on the FDIC’s current Democratic Chair, Marty Gruenberg, and all but says he should be removed due to, among other things, the FDIC’s decades of management failures. If that happened, Republican Vice Chair Travis Hill would become Chair. However, Hill was one of former Chair McWilliams’ closest advisors, serving as Deputy for Policy from 2018-2022 and before that her Senior Advisor. Additionally, Hill’s recently departed Chief of Staff also served as former Chair McWilliams’ Chief of Staff, Deputy, and COO when the IG Report was issued. How none of that could be mentioned in 234 pages remains a mystery.

“Given the partisan Republican attacks on Chair Gruenberg and the SC Report’s inexplicable material omissions regarding former Republican Chair McWilliams and her leadership team including Hill, it appears that the objective was to ignore Republican involvement and focus solely on the Democratic Chair for the purpose of forcing him out and installing Republican Hill as acting Chair. Rather than seeking partisan political advantage and trying to gain control of a banking regulator, people should be focused on fixing the problems at the FDIC and ensuring that those who engaged in misconduct are punished as severely as possible. Put differently, everyone should now do what former Republican Chair McWilliams and her leadership team should have done in 2020.”

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.