U.S. GOVERNMENT PUBLISHING OFFICE

56–522 PDF WASHINGTON : 2024

OVERSIGHT OF THE FDIC’S 

FAILED LEADERSHIP AND 

TOXIC WORKPLACE CULTURE 

HEARING 

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED EIGHTEENTH CONGRESS 

SECOND SESSION 

JUNE 12, 2024 

Printed for the use of the Committee on Financial Services 

Serial No. 118–95 

( 
(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

PATRICK MCHENRY, North Carolina, Chairman 

FRANK D. LUCAS, Oklahoma 

PETE SESSIONS, Texas 

BILL POSEY, Florida 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

ROGER WILLIAMS, Texas 

FRENCH HILL, Arkansas, Vice Chairman 

TOM EMMER, Minnesota 

BARRY LOUDERMILK, Georgia 

ALEXANDER X. MOONEY, West Virginia 

WARREN DAVIDSON, Ohio 

JOHN ROSE, Tennessee 

BRYAN STEIL, Wisconsin 

WILLIAM TIMMONS, South Carolina 

RALPH NORMAN, South Carolina 

DAN MEUSER, Pennsylvania 

SCOTT FITZGERALD, Wisconsin 

ANDREW GARBARINO, New York 

YOUNG KIM, California 

BYRON DONALDS, Florida 

MIKE FLOOD, Nebraska 

MIKE LAWLER, New York 

ZACH NUNN, Iowa 

MONICA DE LA CRUZ, Texas 

ERIN HOUCHIN, Indiana 

ANDY OGLES, Tennessee 

MAXINE WATERS, California, Ranking 

Member 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DAVID SCOTT, Georgia 

STEPHEN F. LYNCH, Massachusetts 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

JIM A. HIMES, Connecticut 

BILL FOSTER, Illinois 

JOYCE BEATTY, Ohio 

JUAN VARGAS, California 

JOSH GOTTHEIMER, New Jersey 

VICENTE GONZALEZ, Texas 

SEAN CASTEN, Illinois 

AYANNA PRESSLEY, Massachusetts 

STEVEN HORSFORD, Nevada 

RASHIDA TLAIB, Michigan 

RITCHIE TORRES, New York 

SYLVIA GARCIA, Texas 

NIKEMA WILLIAMS, Georgia 

WILEY NICKEL, North Carolina 

BRITTANY PETTERSEN, Colorado 

MATT HOFFMANN, Staff Director 
(III) 

C O N T E N T S 

Page 

Hearing held on: 

June 12, 2024 .................................................................................................... 1 

Appendix: 

June 12, 2024 .................................................................................................... 59 

WITNESSES 

WEDNESDAY, JUNE 12, 2024 

Hsu, Michael J., FDIC Board Member, and Co-Chair, Special Review Committee of the Federal Deposit Insurance Corporation (FDIC) .......................... 5 

Kim, Joon H., Partner, Cleary Gottlieb Steen & Hamilton ................................. 6 

Mainoo, Abena, Partner, Cleary Gottlieb Steen & Hamilton ............................... 7 

McKernan, Hon. Jonathan, Board Member, FDIC, and Co-Chair, Special Review Committee of the Federal Deposit Insurance Corporation (FDIC) ......... 8 

APPENDIX 

Prepared statements: 

Hsu, Michael J. ................................................................................................. 60 

Kim, Joon H. ..................................................................................................... 65 

Mainoo, Abena .................................................................................................. 65 

McKernan, Hon. Jonathan ............................................................................... 68 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Garcia, Hon. Sylvia: 

Bloomberg, ‘‘Biden Is Poised to Pick Goldsmith Romero to Lead Overhaul 

at FDIC,’’ dated June 11, 2024 .................................................................... 76 

Hsu, Michael J.: 

Written responses to questions for the record from Representative Hill .... 78 

Written responses to questions for the record from Representative Kim .... 80 

Written responses to questions for the record from Representative Meeks 81 

Written responses to questions for the record from Representative Mooney .................................................................................................................... 78 

Kim, Joon H.: 

Written responses to questions for the record from Representative Hill .... 82 

Mainoo, Abena: 

Written responses to questions for the record from Representative Hill .... 82 

McKernan, Hon. Jonathan: 

Written responses to questions for the record from Representative Kim .... 85 

Written responses to questions for the record from Representative Meeks 91 

Written responses to questions for the record from Representative Mooney .................................................................................................................... 87 

(1) 

OVERSIGHT OF THE FDIC’S 

FAILED LEADERSHIP AND 

TOXIC WORKPLACE CULTURE 

Wednesday, June 12, 2024 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The committee met, pursuant to notice, at 10:08 a.m., in room 

2128, Rayburn House Office Building, Hon. Patrick McHenry 

[chairman of the committee] presiding. 

Members present: Representatives McHenry, Lucas, Sessions, 

Posey, Luetkemeyer, Huizenga, Barr, Williams of Texas, Hill, 

Loudermilk, Mooney, Davidson, Rose, Steil, Timmons, Meuser, 

Fitzgerald, Garbarino, Kim, Donalds, Flood, Lawler, Nunn, 

Houchin; Waters, Velazquez, Sherman, Lynch, Green, Foster, 

Beatty, Vargas, Gonzalez, Pressley, Horsford, Tlaib, Garcia, and 

Williams of Georgia. 

Chairman MCHENRY. The Financial Services Committee will 

come to order. 

Without objection, the Chair is authorized to declare a recess of 

the committee at any time. 

Today’s hearing is entitled, ‘‘Oversight of the FDIC’s Failed 

Leadership and Toxic Workplace Culture.’’ 

I will note at the outset here for scheduling purposes for the committee and our panelists that we have a vote series that will be 

called at 10:30 this morning. That is why I was interested in getting the committee started on time. We are a little late. We will 

go as long as we can, then we will recess for votes and return once 

the series is concluded. I urge Members to return as soon as possible. We will start questioning as soon as we have a sufficient 

number of Members to do that. 

I will now recognize myself for 4 minutes for an opening statement. 

At our May hearing to conduct oversight of the prudential regulators, Members on both sides of the aisle expressed interest in 

holding a separate hearing on misconduct at the FDIC and the 

Cleary Gottlieb report. To my colleagues, I heard you. Today’s 

hearing is focused exclusively on the FDIC’s toxic workplace culture and Chair Gruenberg’s abusive behavior. To our witnesses, we 

thank you for being here today. Your commitment to transparency 

has not gone unnoticed. 

Just days after our last hearing, Chair Gruenberg announced his 

intent to resign at some undetermined future date. His resignation 
2 

should have been welcome news to the FDIC employees, who have 

been subjected to an appalling culture of misconduct and abuse, 

but it was all a farce. Resigning after the confirmation of a new 

Chair is just more of the status quo. Chair Gruenberg knows this, 

which is why he told employees at the FDIC to continue as if he 

would be there until the end of the year. That is outrageous. This, 

though, is part and parcel of Mr. Gruenberg’s failure to accept responsibility for his own actions. His approach to a long-overdue cultural overhaul of the FDIC seems to be deny, deflect, and delay. 

Case in point, 3 weeks after the White House pledged to move 

quickly to replace him, we have yet to see a successor even nominated. Deep institutional changes at the FDIC are needed now, not 

later, which is why I called on President Biden to fire Chair 

Gruenberg for cause. There is a clear succession plan in place. The 

agency’s operations would continue unabated if he rightfully 

stepped down today, so what is the delay? 

The Inspector General, The Wall Street Journal, and Cleary 

Gottlieb all outlined important misconduct at every level of the 

agency in painstaking detail, but based on Chair Gruenberg’s 

claims, we are supposed to believe he somehow missed this appalling behavior while leading the agency for 10 of the last 13 years. 

It is clear that any cultural change will happen in spite of his presence, not because of it. 

The consequences of Chair Gruenberg’s failed leadership go further than the four walls of the FDIC. The events that have unfolded over the last 15 months in our financial system, which include three major bank failures last March, including Signature 

Bank, which was directly under his supervision, involved him directly, or the FDIC under his watch. In April, Chair Gruenberg’s 

Chief Risk Officer reviewed the FDIC’s actions leading up to Signature Bank’s failure and concluded that staffing, whether it be 

shortages or communication issues, was a major issue. 

In November, revelations came to light about the FDIC’s toxic 

culture and Chair Gruenberg’s own abusive behavior towards staff 

tasked with bringing him, ‘‘bad news.’’ It is fair to conclude that 

Chair Gruenberg’s behavior directly impacted the FDIC’s response 

to last year’s banking turmoil. He moved slowly, couldn’t make decisions, and undoubtedly lashed out at his own employees for presenting him information. 

So, I ask the White House and my Democratic colleagues, does 

your own agenda really outweigh the need for a competent leader 

at the helm of the FDIC? For the well-being of the agency and its 

6,000 employees, as well as our financial system, it is time for 

Democrats to join Republicans in calling for an immediate change 

in leadership at the FDIC. With that, I yield back. 

The Chair now recognizes the ranking member of the committee, 

the gentlewoman from California, Ms. Waters, for 4 minutes for an 

opening statement. 

Ms. WATERS. Good morning. Thank you to our witnesses for 

being here today, including Acting Comptroller Hsu, who testified 

just a few weeks ago. 

As Committee Democrats have made very, very clear, all FDIC 

employees deserve a safe work environment. Unfortunately, as the 

Cleary report details, this has not been the case under the leader-
3 

ship of both Republican and Democratic Chairs. In fact, according 

to the report, the FDIC has had a troubling workplace culture since 

1980. I am pleased that the FDIC has begun implementing the reforms necessary, and I am pleased that the White House is reportedly nominating a proven leader, Commodity Futures Trading 

Commission (CFTC) Commissioner Christy Goldsmith Romero, to 

lead this effort as FDIC Chair. 

However, I am concerned that the report we are discussing may 

not tell the full story. For example, while the report focuses on the 

current Chair, I want to know why the report doesn’t examine how 

and why former FDIC Chair, Jelena McWilliams, and her senior 

staff, including the current FDIC Vice Chair, Travis Hill, did not 

do more to ensure FDIC workers had a safe workplace during their 

tenure, both before and after the Inspector General identified a 

number of concerns relating to sexual harassment way back in 

2020. 

Additionally, the Chair does not include critical data needed to 

understand the location and rate of misconduct over time and 

which types of misconduct are currently the most prevalent. My 

staff asked Cleary to provide this information, but they did not. 

This information could significantly impact what types of reforms 

the FDIC leadership should prioritize and where they should be 

implemented. 

Now, while this committee should be focused on the employees 

and exploring ways to strengthen worker protections, Republicans 

are attacking the Democratic Chair, who has already announced he 

will step down. But you won’t hear them call for Republican Vice 

Chair Travis Hill to step down, despite him being a senior official 

under former Chair McWilliams when allegations of misconduct 

persisted. 

I also wonder whether my colleagues will call for anyone who has 

been found liable for sexual abuse to stand down from holding 

other positions of power in government. For example, the former 

President and top Republican is not only an adjudicated sexual 

abuser, but also the first and only former President to be criminally convicted of not 1, not 2, but 34 felonies relating to violating 

election laws, and twice impeached. He also faces three more criminal indictments for his efforts to overturn the election and steal 

highly-sensitive and classified national security documents and 

stash them at his Mar-a-Lago resort. 

Thankfully, President Biden is quickly taking steps to protect 

workers at the FDIC by reportedly nominating CFTC Commissioner Christy Goldsmith Romero to serve as FDIC Chair. Commissioner Goldsmith Romero has a long track record of working to protect our nation’s investors, consumers, and taxpayers. When she 

served as Special Inspector General for the Troubled Asset Relief 

Program (TARP), she successfully held accountable bank executives 

who engaged in financial crimes and fraud. She has been unanimously confirmed by the Senate twice. If Republicans are committed to changing the work culture at the FDIC, I expect that 

they will join with Democrats to support her swift Senate confirmation. I yield back. 
4 

Chairman MCHENRY. We will now recognize the gentleman from 

Michigan, Mr. Huizenga, who is also the Chair of our Oversight 

and Investigations Subcommittee, for one minute. 

Mr. HUIZENGA. Thank you, Mr. Chairman. We will continue to 

hear Democrat colleagues today attempt to deflect blame, and we 

will continue to hear a litany of reasons why Chairman Gruenberg 

is the right man, at the right time, with the right ideas, to reform 

the FDIC. However, one simple fact remains: Chairman Gruenberg 

is a failed leader who has put politics and a radical progressive 

agenda over doing what is right. He has put himself and his own 

ego before the FDIC employees and the well-being of the agency 

that he reportedly loves. 

Mr. Chairman, the independent report, which has been accepted 

by everyone here today, was clear on one thing: Culture starts at 

the top. For nearly 2 decades, Mr. Gruenberg has failed to recognize how his own misconduct negatively affected his own employees. 

Mr. Chairman, it is time for new leadership. It is time to let the 

agency heal. The safety and soundness of our banking system is at 

risk under his leadership, and Chairman Gruenberg should resign 

immediately or be removed by the President. I yield back. 

Chairman MCHENRY. The gentleman yields back. The ranking 

member of our Subcommittee on Oversight and Investigations, Mr. 

Green, is recognized for 1 minute. 

Mr. GREEN. Thank you, Mr. Chairman. I thank the ranking 

member as well, and I associate myself with the comments of the 

ranking member. 

Mr. Chairman, Chair Gruenberg has stated that he will step 

down from his position once a successor is confirmed. I would like 

to thank President Biden for putting forth a capable, competent, 

and qualified nominee, and I encourage the Senate to confirm this 

nominee as quickly as possible, confirm this nominee who will rectify the toxic causality that resulted in opprobrious conduct at the 

FDIC. 

I do concur with the ranking member that the employees, the 

persons who work there in all facets of work deserve a safe and secure work environment. I trust that the successor, the new Chair 

who will succeed Mr. Gruenberg, will work prudently to strengthen 

banking regulations and capital requirements, as well as rein in incentive-based executive compensation that encourages excess risktaking, and again, produce a safe work environment. I thank you, 

and I yield back. 

Chairman MCHENRY. The gentleman yields back. I will note for 

the record that while my Democratic colleagues may be front-running the White House, we have yet to see the full nomination presented as the press reports indicated, and now, our Democrat colleagues are saying it. 

We will now receive the testimony of this hearing’s panel: Mr. 

Michael Hsu, Co-Chair of the Special Review Committee of the 

Federal Deposit Insurance Corporation; Mr. Joon Kim, a partner at 

the law firm, Cleary Gottlieb Steen & Hamilton LLP; Ms. Abena 

Mainoo, also a partner with the law firm of Cleary Gottlieb Steen 

& Hamilton; and the Honorable Jonathan McKernan, Co-Chair of 
5 

the Special Review Committee of the Federal Deposit Insurance 

Corporation. 

I would note Chair Gruenberg’s absence. Originally, the committee noticed and announced he would participate in today’s hearing. Unfortunately, he did have a personal conflict, and we look forward to his appearance before the committee in the future. 

I would like to thank each of our witnesses for being here. You 

will each be recognized for 5 minutes to give an oral presentation 

of your testimony. And without objection, your written statements 

will be made a part of the record. Mr. Hsu, we will begin with you. 

STATEMENT OF MICHAEL J. HSU, FDIC BOARD MEMBER, AND 

CO-CHAIR, SPECIAL REVIEW COMMITTEE OF THE FEDERAL 

DEPOSIT INSURANCE CORPORATION (FDIC) 

Mr. HSU. Thank you, Chairman McHenry, Ranking Member 

Waters, and members of the committee. I am testifying today in my 

capacity as a Director on the Board of the FDIC, and as Co-Chair 

of the Special Review Committee, which was established to oversee 

the independent third-party review of the agency’s workplace and 

culture. In these roles, my objective has been to protect the people 

of the FDIC. That has been my top priority and North Star 

throughout the entire process. The employees of the FDIC need 

and deserve a safe and inclusive workplace and they need it now. 

My joint written statement with Director and Special Review 

Committee Co-Chair, Jonathan McKernan, describes the processes 

by which the independent third-party reviewer was selected and 

how the review and report were overseen. At each and every stage 

of the process, we sought to ensure that the review and report were 

independent, credible, and fair. I believe we achieved that and 

strongly support the report’s findings or recommendations. Most 

importantly, the report provides a clear roadmap to address and 

remedy the pervasive problems at the FDIC. The agency must implement its recommendations immediately. 

I want to reemphasize today the urgent need for actions, not 

words. I am especially focused on actions in three areas: first, addressing the fear of retaliation; second, implementing the right action plan for cultural and structural transformation; and third, ensuring that the Board and senior management can and will be held 

accountable for doing what is necessary to make the FDIC a safe 

and inclusive workplace. 

Currently, the agency is taking action on all three fronts, following through on recommendations in the report. More specifically, the FDIC is in the process of: first, replacing the broken internal process for fielding and responding to reports of harassment 

with a new structure that will bypass management hierarchies and 

utilize third-party investigators, hold wrongdoers accountable, and 

report directly to the Board in order to credibly mitigate the risk 

of retaliation; second, hiring a third-party expert to bring an independent outside perspective on what is needed to ensure cultural 

and structural transformation, including augmenting the agency’s 

action plan as necessary; and third, hiring an independent transformation monitor to hold the agency accountable for following 

through on its commitments and taking the necessary actions in a 

timely manner. 
6 

Protecting the people of the FDIC and earning back their trust 

must be our highest priority. I am fully committed to that. The 

three actions I highlighted—restructuring how the agency does intake, investigations, and accountability; hiring a third-party expert; 

and hiring an independent transformation monitor are 

foundational to many of the recommendations of the report. Taking 

these steps cannot wait and they must be done right. This is my 

focus as a Director. Thank you. I am happy to answer any questions. 

[The prepared statement of Mr. Hsu can be found on page 60 of 

the appendix.] 

Chairman MCHENRY. We will now recognize Mr. Joon Kim, a 

partner at the law firm of Cleary Gottlieb Steen & Hamilton. 

STATEMENT OF JOON H. KIM, PARTNER, CLEARY GOTTLIEB 

STEEN & HAMILTON 

Mr. KIM. Thank you. Chairman McHenry, Ranking Member 

Waters, and members of the committee, my name is Joon Kim, and 

I am a partner at the law firm of Cleary Gottlieb Steen & Hamilton. And along with Jennifer Kennedy Park and Abena Mainoo— 

who is here with me today—the three of us led the recent review 

we conducted on behalf of the Special Review Committee of the 

FDIC’s Board of Directors. 

The Special Review Committee appointed our firm to conduct an 

independent review of allegations of sexual harassment and interpersonal misconduct at the FDIC, including hostile, abusive, unprofessional, or inappropriate conduct, as well as management’s response to these allegations, and the FDIC’s workplace culture, including any practices that might discourage or deter the reporting 

of this type of misconduct. 

In conducting this review, we recognized its importance to the 

FDIC, an institution that performs a critically important public 

function of maintaining stability and public confidence in our nation’s financial system. We appreciated the grave responsibility of 

conducting this type of a review, both to the FDIC and its employees, as well as to the public that it serves. We understood that 

independence, credibility, and fairness were of paramount importance, and that is how we approached the conduct of our review 

and the drafting of our report. 

To gather the facts necessary for the review, we set up a hotline 

through which individuals could make reports. We obtained and reviewed thousands of documents from the FDIC and conducted additional interviews of current and former FDIC employees from 

across multiple offices, divisions, and seniority. The reports made 

to our hotline were particularly revealing, both in volume and in 

substance. Over 500 individuals courageously reported to our hotline, often painfully and emotionally recounting experiences of sexual harassment, discrimination, and other interpersonal misconduct that they had suffered at the FDIC. 

Although we cannot describe all of the incidents reported to us, 

we do feel compelled to convey the powerful emotions that we 

heard. Those who reported incidents to us expressed fear, sadness, 

and anger at what they had to endure. Many had never reported 

their experiences to anyone before, while others who had reported 
7 

internally had been left disappointed by the FDIC’s response. Virtually all of them expressed hope that reporting what they had 

gone through to us might help change and make better the agency 

that they cared about deeply. In conducting our review, we were 

guided by their example and by the goal of doing right by them. 

We hope that our review and our report did justice to their experiences and honored the public service of the thousands of FDIC 

employees. My colleague, Ms. Mainoo, will discuss in her remarks 

the factual findings, analyses, and recommendations set forth in 

our report. 

Thank you for the opportunity to present on this important issue 

to this committee, and we welcome questions. 

[The prepared statement of Mr. Kim can be found on page 65 of 

the appendix.] 

Chairman MCHENRY. We will now recognize Ms. Mainoo for 5 

minutes. 

STATEMENT OF ABENA MAINOO, PARTNER, CLEARY 

GOTTLIEB STEEN & HAMILTON 

Ms. MAINOO. Good morning, Chairman McHenry, Ranking Member Waters, and members of the committee. We set forth in our report the factual findings from our review and analysis of the root 

causes of the issues we identified and recommendations we believe 

would help address the issues that we identified. Our report is 

being submitted to the committee with our written testimony. 

As we set forth in our report, we found that for far too many employees, and for far too long, the FDIC has failed to provide a workplace safe from sexual harassment, discrimination, and other interpersonal misconduct. We also found that a patriarchal, hierarchic, 

and insular culture helped create the conditions that allowed for 

such misconduct to occur and persist. 

In addition, we found that a deep-seated fear of retaliation as 

well as a lack of clarity and credibility around internal reporting 

channels led to an underreporting of workplace misconduct over 

the years. Other root causes we identified included a lack of accountability, insufficient prioritization of workplace culture, risk 

aversion, abuse of certain power dynamics, and insufficient recordkeeping. 

To address these issues, many of which we found were longstanding and deeply ingrained, we made a number of recommendations in our report. In developing the recommendations, we took 

into account the view expressed by many who reported to us that 

truly lasting and meaningful change will not be a matter merely 

of revisions to policies and increased training, although those are 

necessary and important, but must include real cultural and structural change. That is why, among other changes, we recommended 

the appointment of a culture and structure transformation monitor 

as well as an independent third-party expert such that the FDIC 

will have expert guidance in implementing the recommendations, 

as well as a monitor that will monitor and audit such implementation. 

First among our recommendations is to protect the victims, including protecting the physical and psychological safety of those 

who have experienced sexual harassment, discrimination, bullying, 
8 

or other interpersonal misconduct at the FDIC. That was our first 

recommendation because they were our foremost concern. They are 

public servants, who, like so many within the FDIC, care deeply 

about and take great pride in the mission and worth of the FDIC. 

They demand and deserve a workplace with a positive culture that 

is safe from sexual harassment, discrimination, and other interpersonal misconduct. We hope our review and our report will help 

achieve that for them and for all other FDIC employees. 

Thank you for the opportunity to present to the committee on 

this important matter, and we look forward to answering any questions you may have for us. 

[The prepared statement of Ms. Mainoo can be found on page 65 

of the appendix.] 

Chairman MCHENRY. We will now recognize Director McKernan 

for 5 minutes. 

STATEMENT OF THE HONORABLE JONATHAN MCKERNAN, 

FDIC BOARD MEMBER, AND CO-CHAIR, SPECIAL REVIEW 

COMMITTEE OF THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) 

Mr. MCKERNAN. Chairman McHenry, Ranking Member Waters, 

and members of the committee, I am here in my capacity as a CoChair of the Special Review Committee that oversaw Cleary Gottlieb’s review of the FDIC’s workplace. 

I will first address myself to the FDIC employees. Cleary’s report 

establishes that you have been heard. The report makes clear that 

what happened to you was real, and what happened to you was 

wrong and totally unacceptable. I hope the report puts us on a path 

to change and I hope real accountability is not too far off. I would 

like to also convey my respect and appreciation to Director Hsu for 

the exceedingly constructive and nonpartisan way in which he approached this review. I think we set an example for how the FDIC 

Board can and should work. 

In my year and a half at the FDIC, I have developed a strong 

attachment to the FDIC staff and our shared mission. Overseeing 

the review, I saw a different side of the FDIC. That was a jarring 

experience, and I think that is similar to the experience many have 

reading the report. Cleary’s report is a painful read. The report 

documents sexual harassment and misconduct on a scale and nature that shocks the conscience. The report describes a good old 

boys club that is, ‘‘patriarchal and misogynistic.’’ 

The report makes clear there has been a widespread and credible 

fear of retaliation that deters victims from reporting wrongdoing. 

The report also makes clear that there has been a failure to hold 

wrongdoers accountable when actually reported. The report describes how these dynamics compound upon each other, driving a 

cycle of deepening fear and distrust among employees, especially 

women and other underrepresented groups. It is also the case that 

almost all of the FDIC employees are good people, solid public servants, deeply committed to a mission that is central to the success 

of our country. 

Reconciling that with the Cleary report comes down to a question 

of leadership. An organization can prioritize protecting employees, 

it can strive to root out wrongdoers and make an example of them, 
9 

or an organization can prioritize protecting itself. It can strive to 

brush wrongdoers under the rug, move them around, even promote 

them, all with an aim to avoid the litigation, the bad press, and 

the time and expense of disciplining bad actors. The FDIC too often 

chooses the second path. That choice isn’t driven by policies, procedures, or training. That choice is driven by values, and our values 

are set by our leaders. Thank you, and I look forward to your questions. 

[The prepared statement of Mr. McKernan can be found on page 

68 of the appendix.] 

Chairman MCHENRY. Thank you all. I now recognize myself for 

5 minutes for questions. 

Director McKernan, the Chairman of the Board of the FDIC is 

responsible for overseeing the staff of the agency. Is that correct? 

Mr. MCKERNAN. Correct. 

Chairman MCHENRY. Do you think it is important that the 

Chairman be able to have an open dialogue with FDIC employees 

about what they do? 

Mr. MCKERNAN. Absolutely. 

Chairman MCHENRY. Is that what all Board members try to do? 

Mr. MCKERNAN. I think so. 

Chairman MCHENRY. Would you agree that the findings of the 

Cleary report demonstrate that the FDIC employees do not feel 

comfortable interacting with Chairman Gruenberg? 

Mr. MCKERNAN. The report certainly establishes that his reputation and conduct has chilled communication. 

Chairman MCHENRY. How so? 

Mr. MCKERNAN. I think there is a general reluctance among 

some employees to deliver bad news. At least, that is the finding 

of the report. 

Chairman MCHENRY. What does that mean for the agency? 

Mr. MCKERNAN. I think it can certainly impede our ability to 

achieve our mission. If we are going to achieve our mission, leadership needs to make informed decisions, and to make informed decisions, you have to have all the facts, both good and bad. 

Chairman MCHENRY. Great. Does that affect safety and soundness? 

Mr. MCKERNAN. Absolutely. Safety and soundness is essential to 

our mission. 

Chairman MCHENRY. So, rewinding to March of last year when 

you had bad news about three banks going down and the lead-up 

to that, and you had a Chair who has had such a serious chilling 

effect on his staff that they don’t even want to present him bad information, did they fear for their career or just the nasty abuse 

that he would give them for presenting information? 

Mr. MCKERNAN. I am not sure if I understand the question, Mr. 

Chairman. 

Chairman MCHENRY. Did that have any effect in March? 

Mr. MCKERNAN. It certainly could have, but I don’t know of any 

specific incidents. 

Chairman MCHENRY. Okay. So, the safety and soundness question here really falls on the Chair of the FDIC Board. 

Ms. Mainoo, I think you might be the appropriate person to ask 

this. Can you give us some details you learned during the course 
10 

of your investigation about the chilling effect Chairman 

Gruenberg’s behavior has on FDIC employees delivering bad news? 

Ms. MAINOO. Chairman McHenry, we described in our report, 

around page 90 of our report, incidents involving Chairman 

Gruenberg. We had looked into allegations of interpersonal misconduct concerning Chairman Gruenberg as those were part of the 

publicly-reported allegations that led to the need for our independent review, and specifically, we described incidents as recently 

as March 2023 in which an individual reported an outburst involving Chairman Gruenberg. 

Chairman MCHENRY. And what did you take from this? Was that 

a widespread thing or just a one-off occasion? 

Ms. MAINOO. We obtained reports of several incidents over time, 

including when Mr. Gruenberg was Vice Chairman of the FDIC, 

and continuing until at least 2023 during his current tenure as 

Chairman, where employees reported experiences with Chair 

Gruenberg, including the Chair losing his temper. And what we 

took from that and what we heard from employees who reported 

to us was that this could have a chilling impact on communications 

with Chair Gruenberg, although I will also note that we did not 

identify specific incidents that affected the FDIC’s ability to meet 

its mission. 

Chairman MCHENRY. Okay. So, you have stories about the 

chilling effect. Does that establish the reputation he had among 

employees at the FDIC? 

Ms. MAINOO. Yes, in the sense that the incidents contribute to 

the reputation that Chair Gruenberg has for losing his temper. 

Chairman MCHENRY. Okay. And when I ask this question about 

being presented tough information, bad news, there was nothing 

but bad news in the lead-up to the bank failures in March of last 

year. This reputation he had for screaming, yelling, berating—and 

the report describes one incident where it is a period of something 

like 30 minutes that he was yelling at one employee—would have 

had an impact on their ability to actually tell him the bad news 

that was occurring in the financial system, which then could lead 

to a question of safety and soundness decision-making for the agency. Clearly, from the outside, we saw the inability of the FDIC to 

make a decision. Now, this reputation he has looks clearly connected with that inability. 

Director McKernan, knowing what we know now, do you think 

Chairman Gruenberg should immediately step aside? 

Mr. MCKERNAN. Mr. Chairman, my view is the FDIC urgently 

needs a fresh start, and the sooner the better. 

Chairman MCHENRY. I now yield back, and recognize the ranking member, Ms. Waters, for 5 minutes. 

Ms. WATERS. Mr. Kim, the Cleary report addresses some serious 

issues that confront the FDIC, yet the report does not provide any 

key information that is important to understanding the workplace 

culture at the FDIC and how to best correct the problems the report identified. For example, the report does not indicate how many 

of the 510 allegations are unique, or even when these events occurred other than that they occurred sometime between 1980 and 

this year. In fact, when discussing the allegations received through 

the hotline, the report states that, ‘‘because various individuals re-
11 

ported different types of misconduct that were sometimes overlapping or difficult to characterize, the numbers are estimates,’’ nor 

does the report indicate how many of the allegations were firsthand 

or secondhand. 

Given this lack of specificity, it is difficult to understand what 

types of misconduct may be increasing or declining over time and 

what types of misconduct are most prevalent today. Can you respond to that? 

Mr. KIM. Yes. Thank you. Our report reflects that 510 individuals reported into our hotline, and we provide, on page 115 of our 

report, a breakdown of the different categories of reports that came 

in by subject matter. Many of those reports came in anonymously 

or confidentially where the person reporting specifically requested 

that their information be kept confidential. 

Ms. WATERS. How many of those reports were anonymous? 

Mr. KIM. Pardon me? 

Ms. WATERS. How many—— 

Mr. KIM. How many were confidential? 

Ms. WATERS. ——came in anonymously? 

Mr. KIM. In the—— 

Ms. MAINOO. I—— 

Mr. KIM. Sorry. Go ahead. 

Ms. MAINOO. ——can take that. We received 200 reports through 

the website that allowed for anonymous reporting. That said, even 

some of those reports contained contact information for the individuals, so 200 would be the high estimate. 

Mr. KIM. We did include in the appendix to the report—it is approximately 50 pages—46 representative examples of reports that 

came in to our hotline. That provides quite a bit of detail, both 

dates—— 

Ms. WATERS. Okay. Let me be clear. What is the total number 

of reports? How many reports? What was the number of reports? 

Mr. KIM. There were 510 reports made through the hotline. 

Ms. WATERS. So, 510 reports? And how many of those were anonymous? 

Mr. KIM. Approximately 200. 

Ms. WATERS. About 200 of those? Okay. 

Mr. KIM. And just to complete the thought, we did provide in the 

report representative examples of the types of allegations we received with details and dates. And to the extent we did not include 

specificity, that was for the reason of protecting the confidentiality—— 

Ms. WATERS. How many do you consider you were able to validate? 

Mr. KIM. The ones that are identified in the appendix, are corroborated or validated, is set forth in the description in the appendix. It includes some reports that were consistent with other reports that others had made. We do note in the report that many 

of the 510 reports are mere allegations. They are allegations that 

came into the report. We know that limitation in our report. But 

we also find in the report that the sheer volume and the nature 

of 510 reports coming in within a relatively short time of a hotline 

being opened with these types of allegations is itself a finding—— 
12 

Ms. WATERS. How many of these occurred at the headquarters, 

the regional offices, or the field offices? Is that information identified in the report? I didn’t remember seeing how many were actually at headquarters, or in field offices or regional offices. 

Ms. MAINOO. We said in the report on page 115, which is the 

page that Mr. Kim had pointed to, that many allegations came 

from regional or field offices. We received reports from all six regional offices. We received reports from over 30 of the field offices, 

and we also received reports from the FDIC’s headquarters. One 

limitation in the information that was available to us goes to the 

recordkeeping challenges that we had identified through our review. So, one of our recommendations is that the FDIC ensure 

more systematic recordkeeping. 

Ms. WATERS. Thank you. 

Chairman MCHENRY. We will now recognize the Vice Chair of 

the committee, Mr. Hill of Arkansas, for 5 minutes. 

Mr. HILL. I thank the Chair, and I thank the panel for being 

with us today to continue our investigation of the poisonous culture 

at the FDIC. 

Ms. Mainoo, the Cleary Gottlieb report outlines that employees 

don’t have trust in the reporting process, even though the FDIC 

has over five offices for employees to take their reports. This leads 

to employees feeling like the process is broken, confusing, ineffective, and, to some degree, there is no real incentive to report when 

people are being browbeaten, and that word passes down through 

the culture. Can you describe some of the difficulties with that reporting channel, to follow up on the line of questioning, in your review? 

Ms. MAINOO. Yes, Congressman. We described in our report what 

we found in our review regarding concerns about the reporting 

processes and investigation processes. One question that FDIC employees have when they experience interpersonal misconduct is 

whether that conduct even violates any of the FDIC’s policies, and 

this is in part due to some confusion about the policies and insufficient training on the policies. 

Mr. HILL. Let me stop you there, because the FDIC and the 

Comptroller of the Currency and the bank regulators have imposed 

a strict standard as a part of their examination of human resources 

practices at the institutions they have regulated since the 1990s. 

What is not clear about sexual harassment in the FDIC policy that 

makes it so challenging to figure out? 

Ms. MAINOO. One question that comes up is whether conduct 

that does not necessarily violate the law but otherwise would count 

as harassment within the FDIC’s policies does violate any policy. 

There is a misperception that in order for any conduct to violate 

the policies, it needs to rise to the level of unlawful conduct. 

Mr. HILL. Is this a place where you would want to work? Based 

on your spending weeks on this project, would you want to work 

in this environment? 

Ms. MAINOO. I think that is a difficult question to answer. As we 

have all said in our statements, it is very clear, and we heard from 

the FDIC employees who reported to us how proud they are to 

work at the FDIC—— 
13 

Mr. HILL. Excellent. It is an amazing mission since 1933, I agree, 

an important mission. I don’t believe that the current Chair should 

be in charge of cleaning up this situation, and I am glad, according 

to the ranking member, that President Biden is going to appoint 

a new leader, but in the interim, with how long the confirmation 

process will take, it is my judgment that we should have the transition today, and the current Chairman should be out of his office 

in order to move this atmosphere forward. 

Mr. McKernan, let me turn and talk about the implications of 

this. We have a softening economy. We have a rising set of challenges in commercial real estate lending. We have the sharpest increase in interest rates since 1980, which has created some real 

pressure in our depository institutions. And I am concerned that 

we don’t have the right leadership to get the basic job done at the 

FDIC. What is your assessment of that? This committee heard testimony during the Silicon Valley Bank failure. It was not impressive what we heard from the FDIC, and, in fact, you sent us a 

memo pointing out the significant managerial weaknesses. 

Mr. MCKERNAN. Congressman, what I would say to that is the 

state of affairs at the FDIC is challenging. Morale is bad. We just 

fell, I think, second to last in our group in Federal employment surveys. We were near the top for quite some time. I think it is fair 

to say that a lot of staff have lost confidence in the leadership, and 

even the Board. I think it is fair to say that staff have seen no real 

accountability, so it is hard to see much commitment to change, absent that accountability. I think it is fair to say that there is a lot 

of skepticism, even cynicism about prospects at the FDIC. 

But I think it is also important to really emphasize that almost 

all of the FDIC employees are good people. Like I said at the beginning, they are solid public servants, deeply committed to the mission despite everything that we have going on, and they are going 

to keep pushing to do the mission. I think it is the job of the leadership to make sure that they can do their job. Frankly, you cannot—— 

Mr. HILL. I agree. Let me reclaim my time in closing and simply 

say that you are right. We have to have the best morale, the best 

esprit de corps, the best talent in the FDIC to handle their jobs, 

but I don’t believe that is being done. I believe change needs to 

happen immediately. I yield back. 

Chairman MCHENRY. This will be the final questioner before we 

go to Floor votes, and we will recess after Ms. Velazquez. Ms. 

Velazquez of New York is recognized for 5 minutes. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. Mr. Kim, Ms. 

Mainoo, can you tell us how far back these issues date and why 

employees didn’t feel comfortable reporting them earlier? 

Ms. MAINOO. As we explain in our report, these issues are longstanding. As Mr. Kim noted earlier, we included in our report 

about 50 representative examples of the types of allegations that 

we learned about, and we provide detailed descriptions. And even 

among those representative examples, you have some allegations 

going as far back as the late 1980s. 

Ms. VELAZQUEZ. Okay. Thanks. And do these reports become 

greater over time or less towards today? 
14 

Ms. MAINOO. It is difficult to speak to any patterns in terms of 

interpersonal misconduct identified at the FDIC. As we laid out in 

our report, the human resources group that receives and currently 

investigates allegations of interpersonal misconduct did not have a 

systematic way of keeping records of those types of allegations 

until last year. 

Ms. VELAZQUEZ. Thank you. Acting Comptroller Hsu, while these 

incidents certainly did occur on Chair Gruenberg’s watch, they also 

occurred under the chairmanship of Jelena McWilliams. Is that correct? 

Mr. HSU. That is my understanding, yes. 

Ms. VELAZQUEZ. Mr. Kim, and Ms. Mainoo, your report states 

that over 500 people who reported allegations of misconduct are 

disproportionately women and people from underrepresented 

groups. Can you both speak to the type of incidents FDIC employees from this group face, and how the, ‘‘good old boys,’’ culture enabled these events to occur without repercussions? 

Mr. KIM. I can start. Yes, we do make the finding that those who 

reported were predominantly women and from underrepresented 

groups, and we also noted that we also spoke to many people who 

had positive experiences at the FDIC. And in fact, some of the people who did report incidents generally had positive experiences 

themselves, but it was important for us to note that, predominantly, those reporting these issues were those who appear to be 

women or underrepresented minorities. 

Ms. VELAZQUEZ. Can you talk about the, ‘‘good old boy,’’ network? 

Ms. MAINOO. Yes. We received reports about favoritism. For example, one of the examples that we included in the appendix with 

the representative examples talked about, and it was reported by 

two individuals where they observed a manager acting inappropriately toward an employee in the presence of an executive. And in 

that situation, the executive asked the employee who had been 

yelled at and had been the subject of the abuse to apologize, and 

did not say anything to the manager. And one of the people who 

reported to us observed that this was based on the personal relationship that the executive had with that manager, and to that individual, this was an example of the, ‘‘good old boys,’’ network. 

Ms. VELAZQUEZ. So, how do we break up this culture? 

Ms. MAINOO. Cultural and structural transformation are important because, as we have explained, these issues are longstanding. 

There have been previous efforts to bring about cultural change at 

the FDIC. We believe that in part because these issues have continued to persist, those efforts have been ineffective. And so our 

recommendations, including the appointment of a monitor to oversee the FDIC’s work going forward, are intended to bring about 

change. 

Ms. VELAZQUEZ. Thank you. The FDIC created an action plan. 

Can you speak to the viability of the plan and whether you think 

the plan alone is sufficient to address the structure and cultural 

changes? 

Mr. KIM. As we noted in the report, the action plan does contain 

proposed actions that overlap with our recommendations. So obviously, both were seeking to address a similar or the same issue. 

However, we had some additional recommendations that we be-
15 

lieved were important, as Ms. Mainoo mentioned. Very important 

to us was the appointment of a transformation monitor who could 

monitor and audit the steps that were being taken, and that this 

person be or the monitor be independent and have the necessary 

resources. Also, we recommended the retention of an external expert who is expert in these areas. And then, importantly, we had 

a recommendation that the review process be conducted by a group 

that is independent. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. I yield back. 

Chairman MCHENRY. The gentlelady’s time has expired. We will 

now recess for Floor votes, and we will restart with Mr. Lucas 

when we return. 

The committee stands in recess. 

[recess] 

Chairman MCHENRY. The committee will come to order. We are 

going to return to our questioning order. Thank you to the panelists for remaining. 

I will now recognize the gentleman from Oklahoma, Mr. Lucas, 

who is also the Chair of the House Science Committee, for 5 minutes. 

Mr. LUCAS. Thank you, Mr. Chairman, and I appreciate you 

yielding to me for questions. In my tenure in Congress, on a variety 

of committees, we have dealt with a number of sticky sort of questions, things that had to be addressed, things that could not be allowed to go unchallenged, and I occasionally take a little different 

perspective in the questions I ask. 

Mr. Kim, on December 11, 2023, the FDIC Special Review Committee chose your firm to conduct an independent review of the 

FDIC’s culture into allegations of sexual harassment, misconduct, 

and just a toxic culture at the FDIC. You and your colleagues, Ms. 

Mainoo and Ms. Park, led the team for this investigation. Has your 

team conducted investigations into workplace misconduct before? 

Mr. KIM. Yes, we have. 

Mr. LUCAS. Mr. Kim, when the Special Review Committee chose 

your firm, what was your understanding of the scope of the investigation with respect to the conduct of the Chairman? 

Mr. KIM. The scope of our review was set forth to us in the resolution from the Board, and that was for us to conduct an independent review of allegations of sexual harassment and interpersonal misconduct at the FDIC, including hostile, abusive, unprofessional, or inappropriate conduct, as well as management’s response to these allegations, and the FDIC’s workplace culture, including any practices that might discourage or deter the reporting 

of this type of misconduct. That was the scope that was provided 

to us. 

Mr. LUCAS. So that we may better understand your investigation, 

could you elaborate on the steps your firm took to ensure independence of the investigation, to safeguard the report against any bias? 

Mr. KIM. Yes. Obviously, as lawyers, we have ethical obligations 

to our client. In this case, our client was the Special Review Committee of the FDIC Board. That was the exclusive ethical duty that 

we owed. The investigative team understood that and we also, as 

a precautionary measure, created walls internally at the firm to 

separate out any lawyers who do banking work. And we conducted 
16 

our review in a way which ensured that independence, but also 

independence within the firm, and also from within the FDIC because there was a need for independence in that regard as well. 

Mr. LUCAS. There are some who have been distressed about the 

focus on the current Chairman rather than his predecessors. Mr. 

Kim, during the course of your investigation, if significant issues 

were uncovered regarding previous Chairs that contributed to the 

toxic workplace at the FDIC, how would that have been included 

in the report? 

Mr. KIM. Yes. We did not intend to focus on particular Chairs. 

As we make clear in the report, the workplace culture issues were 

longstanding, and have spanned many years, across different 

Chairs. We addressed the conduct of the current Chairman because 

public reporting relating to his conduct and his reputation was already publicly reported by the time we were appointed, and were 

what led to the need for an independent review as opposed to a review led by management, which is what was contemplated before. 

And for that reason, as well as the reason that he is the current 

Chairman, and, obviously, as many people reported to us, culture 

starts at the top, and also because it is relevant to the implementation of the recommendations, we deemed it appropriate and necessary to cover his conduct as well in the way we did in the report. 

Mr. LUCAS. Continuing my line of thought, Mr. Kim, of course, 

as you are gathering all the information and determining what is 

relevant to the investigation, not every piece of data would be included in the final report. From your interviews with current and 

past employees, was there evidence of substantial misconduct, misbehavior like Mr. Gruenberg’s from the previous Chairman that 

was left out of the report? 

Mr. KIM. As you have noted, not everything that we learned is 

set forth in the report. That includes with respect to anyone, including the current Chairman. What we included was what is relevant and necessary to understand our factual findings and to support our recommendation. That is what we included in the report. 

Mr. LUCAS. One last question, Mr. Kim. Would you expand on 

how Chairman Gruenberg’s leadership may be a challenge to the 

FDIC’s cultural transformation that we all want? 

Mr. KIM. We did not in the report, nor do we today take a position on whether the current Chairman should or should not stay 

as the Chair of the FDIC. We believe that to be beyond the mandate of our review. We wanted to review and investigate the facts 

set forth, the facts that were necessary to understand our findings, 

and the facts that were necessary to support our recommendation. 

Mr. HUIZENGA. [presiding]. The gentleman’s time has expired. 

Mr. LUCAS. Thank you, Mr. Kim. I yield back, Mr. Chairman. 

Mr. HUIZENGA. The gentleman’s time has expired. With that, the 

gentleman from Massachusetts, Mr. Lynch, is recognized for 5 minutes. 

Mr. LYNCH. Thank you, Mr. Chairman. I want to begin by just 

saying there is a certain element of disingenuousness in terms of 

the Republican position on abuse of women in the workplace. We 

hear many complaints about it here with respect to a Democratic 

appointee, Mr. Gruenberg, who has admitted that he is leaving the 

office, but I just want to point out that all of my Republican col-
17 

leagues are supporting former President Trump, who has an atrocious and long record of poor treatment, not only poor treatment—— 

Mr. SESSIONS. Mr. Chairman. 

Mr. LYNCH. I am speaking. I am speaking. This is my time. And 

remember, the relevance here is the next President will appoint the 

FDIC Chair that we are questioning the conduct of today. So, this 

is about the fitness and the true and genuine concerns that my colleagues have with respect to what has happened here. Let’s put 

aside for a minute the fact that he is a convicted felon on a deal 

with a porn star, that the—— 

Mr. SESSIONS. Mr. Chairman, that is not a correct—— 

Ms. WATERS. The time belongs to the gentleman from Massachusetts. 

Mr. LYNCH. This is my time. 

Mr. HUIZENGA. Hold on. 

Mr. LYNCH. A civil conviction by a jury—— 

Mr. HUIZENGA. I will suspend for just a moment. We will suspend the clock. The gentleman cannot interrupt that way, and I 

would remind the gentleman from Massachusetts to direct his remarks to the Chair. 

Mr. LYNCH. Yes. 

Mr. HUIZENGA. And you will have your time. With that, the clock 

may resume. 

Mr. LYNCH. Thank you, Mr. Chairman. I respect that, and I appreciate that. And we are talking about someone who has been convicted by a jury in a civil court for sexual abuse. And then, I could 

have brought in a tape here of the Access Hollywood thing where 

he talked about how he grabs women’s genitals and kisses them 

right off the bat. So, I just want to rebalance this about what we 

are doing here today. And if we are truly concerned about the way 

women are treated in the workplace, there is real reason to question the genuineness of the criticism on my colleagues’ part. 

I am a former union president, so let’s get to the workplace here. 

And I was a union steward before I was a union president. In the 

workplace, if some of this stuff, which was totally unacceptable— 

and I totally agree with the factual basis of the record and the investigation. Mr. Kim, or Ms. Mainoo, why was the union not involved here? As a union steward, I would have been the first person in the workplace to know about that activity, and there would 

have been a duty of fair representation on my part as a union steward to go to bat for those women, for those employees who were 

being treated like that. What happened here? You did the investigation. This is a union workplace. The National Treasury Employees Union (NTEU) is the collective bargaining representative 

for these employees, I believe. What happened there? What was the 

breakdown there? 

Ms. MAINOO. Thank you, Congressman. You are correct that the 

National Treasury Employees Union is the relevant union here. 

And as we explained in our report, we spoke to the union representatives as part of our effort to understand the scope of issues 

relating to interpersonal misconduct at the FDIC. And in terms of 

the union’s role, the union did have a role in providing support, 

both to employees—— 
18 

Mr. LYNCH. How many grievances were filed? If I was the union 

steward, I would file a grievance every single time something like 

that happened. How many grievances were filed? 

Ms. MAINOO. We know that grievances were filed along with 

complaints under the anti-harassment program and under the 

FDIC’s equal employment opportunity policy. 

Mr. LYNCH. Okay. And where did those grievances go? Was there 

a procedure where they could be addressed? 

Ms. MAINOO. There was a four-step process, and the first step 

was for any grievances to go to a supervisor, all the way up to the 

Chair or the Chair’s designee. 

Mr. LYNCH. How many were sustained? How many grievances 

were sustained, and what action happened as a result of that? 

Ms. MAINOO. What we say in our report is that insufficient disciplinary actions were taken in response to allegations of interpersonal misconduct. And one of the statistics we cite is from the 

FDIC’s reports that it made to Congress, that out of 92 complaints 

that were made between 2015 and 2023 under the FDIC’s anti-harassment policy, the most serious disciplinary action that was taken 

was suspensions, and that was in two instances. 

Mr. HUIZENGA. The gentleman’s time has expired. 

Mr. LYNCH. Thank you for your indulgence, Mr. Chairman. I appreciate it. Thank you. I yield back. 

Mr. HUIZENGA. The Chair would also like to remind the Members 

up here about what the hearing is supposed to be about, but also 

about Rule 17. Rules of decorum do require us to not impugn other 

Members, and the President, and we would include nominees in 

that. 

Ms. WATERS. Will the gentleman yield? 

Mr. HUIZENGA. I will not. I will also note that the Members may 

use their 5 minutes as they wish. 

Ms. WATERS. Parliamentary inquiry. 

Mr. HUIZENGA. What is the gentlewoman’s parliamentary inquiry? 

Ms. WATERS. I want to be sure about what you are advising us. 

Are you advising us that we are not to make any statements about 

the President? 

Mr. HUIZENGA. No. 

Ms. WATERS. Would you please clarify? 

Mr. HUIZENGA. I would like us to adhere to Rule 17, which says 

that we should not mischaracterize members or current members 

of government or past members of government. 

Ms. WATERS. Despite facts. 

Mr. HUIZENGA. The gentleman from Texas is recognized for 5 

minutes. 

Mr. SESSIONS. Mr. Chairman, thank you very much. I would like 

to delve into and take a little bit further approach. Mr. Hsu, and 

Ms. Mainoo, thank you for your comments today. Both of you used 

the word several times, ‘‘retaliation.’’ Are you both lawyers? 

Ms. MAINOO. Yes. 

Mr. SESSIONS. What is the Federal law related to retaliation, at 

least in your opinion, that this whole agency, all the management 

and others had been advised about, because I have heard you twice 

say there is a concern about retaliation. 
19 

Ms. MAINOO. An example would be the antidiscrimination laws, 

which, in addition to making discrimination based on protected 

classes unlawful, would also cover any retaliation against individuals who make complaints about discrimination. 

Mr. SESSIONS. Would that be the same as a whistleblower, or is 

a whistleblower a different type of status? In other words, if a person is allowed to give feedback, their name, the information, specific information, you know who they are, is that treated differently 

under the law than a whistleblower? I think the answer is, yes. 

Ms. MAINOO. Could you just rephrase your question? 

Mr. SESSIONS. Yes, ma’am. 

Ms. MAINOO. Just to make sure I understand it. 

Mr. SESSIONS. Yes, ma’am, and thank you. There is feedback 

that was provided within the agency. I don’t know what that venue 

was, but we have heard about some 500—there were some 300 perhaps where they provided their name and direct information for 

you to get back to them. You have already said, yes, there would 

be Federal law related to the protection of those people, at least as 

it relates to someone retaliating against them. 

Ms. MAINOO. Correct. 

Mr. SESSIONS. Is that the same or a different law than generally 

would apply to whistleblowers, and did you have whistleblowers? 

Ms. MAINOO. There are also specific whistleblower laws that protect individuals who report violations of law, so that is another example. 

Mr. SESSIONS. Okay. Now, I have heard both of you mention retaliation, probably at least in your mind as a source of probably 

what is still there. What has taken place in relationship to that, 

and who would be responsible for that observation, and dealing 

with retaliation in this FDIC? 

Ms. MAINOO. To elaborate on the concern about retaliation, one 

concern that we heard was, in addition to confusion about whether 

any conduct violated FDIC policies and whom to report to, there 

was also a concern about whether FDIC employees could trust the 

reporting channel. 

Mr. SESSIONS. Yes, ma’am. I want to go to who is responsible for 

directly taking that issue on with the knowledge that we have 

heard that the current leadership is incapable of effectively managing the organization. Who is taking that issue on within the 

agency, notwithstanding that they should not be waiting for a new 

person to be approved, and who is taking this issue of retaliation 

on right now and has been in the past year? Who? Name that title. 

Mr. HSU. Congressman, I believe the full Board needs to be engaged. 

Mr. SESSIONS. The full Board is great. Okay, the Board. Who? 

You represent the Board? 

Mr. HSU. I am on the Board, yes. 

Mr. SESSIONS. What are you doing to make sure that retaliation 

is not alive and well and will not be tolerated? What are you doing 

then, sir? 

Mr. HSU. The fear of retaliation requires both cultural and structural transformation. There is currently a process that is broken. 

Mr. SESSIONS. When will that be fixed, sir, since you are the responsible party? 
20 

Mr. HSU. The Board is currently taking action to create a new 

structure—— 

Mr. SESSIONS. When will that be fixed, and does that require a 

new head of the agency to approve that? 

Mr. HSU. It is being fixed as we speak. The Board is currently—— 

Mr. SESSIONS. It is being fixed. 

Mr. HSU. It is being fixed currently. 

Mr. SESSIONS. Would you please provide this committee, both Republicans and Democrats, with notice when that has been fixed? 

Mr. HSU. Yes. 

Mr. SESSIONS. Notwithstanding who the Director is, it is the 

Board. I sure appreciate your help, and thank both of you very 

much. 

I just think that some of the things going back to conversation 

about what needs to be fixed today within the division of labor, 

there are certain things the new Chairman would need to be responsible for, and there are also things that are current issues. I 

appreciate your help. Thank you very much, Mr. Chairman. I yield 

back. 

Mr. HUIZENGA. Yes. The gentleman’s time has expired. With 

that, the gentleman from California, Mr. Sherman, is recognized 

for 5 minutes. 

Mr. SHERMAN. Thank you. We have had a problem since the 

1980s. I won’t repeat the reports because they have been stated so 

often, but they show a horrendous picture. And now we are close 

to, well, I can’t say solving, but to making this agency as good as 

it can be as far as its workplace culture. I want to commend the 

law firm for its report. I want to commend The Wall Street Journal 

for really forcing that report to be commissioned, and now we are 

so close. Mr. Gruenberg is resigning. President Biden is going to 

appoint a successor, and I want to call upon the Administration to 

appoint a successor as soon as possible. 

But I want the Republican members of this committee to take 

the opportunity to demand that the Senate not engage in dilatory 

tactics to prevent that successor from being confirmed—a prompt 

hearing, and then an up-or-down vote without any of the Senate 

tricks—because I was one of those who asked for this hearing, but 

that was before Mr. Gruenberg announced his retirement. The title 

of this hearing is about the toxic workplace culture at the FDIC. 

If the Senate unduly delays the confirmation, we will need another 

hearing, Mr. Chairman, on the Senate’s toxic culture of delay, 

which would be preventing us from dealing with the toxic culture 

at the FDIC. 

Now, some have argued that somehow the failures of Signature 

Bank and First Republic Bank are a result of Mr. Gruenberg’s temperament. Mr. Hsu, you were there. Did these banks fail because 

they had bad management and they failed to account for interest 

rate risk, or did they fail because of Mr. Gruenberg’s personality? 

Mr. HSU. Thank you for the question, Congressman. The OCC 

does not regulate Silicon Valley Bank. 

Mr. SHERMAN. Yes. I am asking you in your role as a member 

of the FDIC. 
21 

Mr. HSU. Yes. The factors that led to the failures are well laid 

out in the reports that the FDIC has gotten. 

Mr. SHERMAN. Do any of those reports say it is Mr. Gruenberg’s 

personality? That is not mentioned? You are on the FDIC Board. 

Has anyone at the FDIC identified for you, I was going to bring 

this First Republic issue up or Signature Bank up, but I failed to 

bring it up because I was worried about the Chairman’s personality? Has anybody stepped forward and said his personality 

stopped them from taking action? 

Mr. HSU. No. 

Mr. SHERMAN. The National Treasury Employees Union (NTEU) 

represents the FDIC employees. I wonder whether Mr. Hsu and 

Mr. McKernan can commit to working with the NTEU as the FDIC 

moves forward to improve its workforce culture? 

Mr. HSU. Yes. 

Mr. MCKERNAN. Yes. 

Mr. SHERMAN. I would point out that there are 6,600 employees 

who deserve a good workplace culture, but there are 330 million 

Americans who deserve good bank regulation, and if Mr. 

Gruenberg resigns before a successor is confirmed, the FDIC could 

be split 2-to-2. 

Mr. Hsu, if the FDIC was split 2-to-2 and we had another big crisis, Silicon Valley Bank 2, is it possible the FDIC would split 2- 

to-2 as to what action to take if we only had 4 Commissioners? 

Mr. HSU. It is hard to speculate about that. 

Mr. SHERMAN. But there is a reason why you have an odd number of Commissioners, correct? It is so that you are less likely to 

split 2-to-2. 

Mr. HSU. I don’t want to speculate about that. 

Mr. SHERMAN. Okay. I won’t ask you to speculate. But last I 

checked, 2 plus 2 was 4. If you have only 4 members, then you can 

divide 2-to-2. 

I would finally point out that Silicon Valley Bank also failed because interest rate risk was not built in sufficiently in our bank examination process, and we need to mark-to-market all long-term 

instruments that banks hold, whether it is available for sale or 

held to maturity. And until we do that, we will see banks put too 

much of their in Wall Street—— 

Mr. HUIZENGA. The gentleman’s time has expired. 

Mr. SHERMAN. I yield back. 

Mr. HUIZENGA. The gentleman’s time has expired. The gentleman 

from Missouri, Mr. Luetkemeyer, who is also the Chair of our Subcommittee on National Security, Illicit Finance, and International 

Financial Institutions, is now recognized. 

Mr. LUETKEMEYER. That is a very long name, Mr. Chairman. 

Mr. HUIZENGA. Yes. I was truncating it in my own head. Sorry 

about that. 

Mr. LUETKEMEYER. Thank you. Thank you, Mr. Chairman. And 

I thank all of you for being here today. This is a very serious matter that deserves a lot of insightfulness and a lot of, I think, insightful comments and questioning. 

My first question is to Mr. Hsu this morning. Do you take this 

report seriously, Mr. Hsu? 

Mr. HSU. Very seriously, yes. 
22 

Mr. LUETKEMEYER. Okay. You say in your written testimony that 

you are, ‘‘committed to holding any employee engaging in misconduct accountable,’’ and your main objective is to protect the employees. You believe this? 

Mr. HSU. Yes. 

Mr. LUETKEMEYER. Why have you not taken action to fire Mr. 

Gruenberg at this point? 

Mr. HSU. The actions we are focused on are actions that I can 

influence, which relate to hiring the third-party expert—— 

Mr. LUETKEMEYER. You can’t influence this, him continuing to be 

at the head of this agency? 

Mr. HSU. That decision is for the White House and for the Senate. 

Mr. LUETKEMEYER. Can’t the FDIC Board do something about 

this? 

Mr. HSU. I’m sorry? 

Mr. LUETKEMEYER. Can’t the FDIC Board do something about 

this? 

Mr. HSU. The FDIC Board doesn’t have the authority. 

Mr. LUETKEMEYER. What happens if Mr. Gruenberg commits a 

felony or winds up in jail tomorrow? Who takes over? 

Mr. HSU. I think, under the rules, the Vice Chair would take 

over. 

Mr. LUETKEMEYER. We have a Vice Chair. Okay. Mr. McKernan, 

do you take this report seriously? 

Mr. MCKERNAN. Absolutely. 

Mr. LUETKEMEYER. In your testimony, you say that you hope accountability is not far off. Do you believe this? 

Mr. MCKERNAN. Do I believe it is far off? 

Mr. LUETKEMEYER. Yes. 

Mr. MCKERNAN. I am not particularly optimistic that we will see 

accountability soon. 

Mr. LUETKEMEYER. Okay. Yes, I am concerned about that part. 

You also say the reconciling report comes down to a question of 

leadership. An organization can prioritize protecting the employees, 

it can root out wrongdoers, and make an example of them, but we 

need leaders. Why are you not taking action? Why are you not 

pressing for Mr. Gruenberg to resign? 

Mr. MCKERNAN. I am pressing for the Board to take a more active role, to your earlier question. I think there is a real question 

here that we at the Board need to consider during this interim 

when we are waiting for a new Chair or waiting for the current 

Chair to resign and have the Acting Chair. I think the Board needs 

to take a more active role here, and I have been pushing for that. 

Mr. LUETKEMEYER. appreciate that, because I think you were 

talking a minute ago about having leaders and solving these problems, and you guys are in a position, Mr. McKernan and Mr. Hsu, 

of being leaders in this situation. As leaders, you need to step up 

and stop the nonsense. Otherwise, you are an enabler, if you continue to allow this to go on. You are no better than Mr. Gruenberg, 

in my mind, if you allow it to go on. It has to be stopped. 

Mr. Kim, and Ms. Mainoo, is rape a crime? You both are attorneys. You tell me. 

Mr. KIM. Yes, rape is a crime. 
23 

Mr. LUETKEMEYER. In your report, you indicate that at this hotel 

that a lot of the FDIC folks go to when they are in training, there 

was a rape that occurred besides a bunch of, I think 24 more instances of harassment of some kind. Was anybody prosecuted as a 

result of that? 

Mr. KIM. I believe there was a rape that was alleged and presented to the local police department. I don’t believe that there 

was—— 

Mr. LUETKEMEYER. There was no follow-through on that? 

Mr. KIM. Not that we are aware of. 

Mr. LUETKEMEYER. So, we have an alleged crime here that nobody took care of. Was it swept underneath the rug? This is a very 

serious crime. I don’t understand how they can get away with this, 

what you are telling me, that they swept it underneath the rug? 

Mr. KIM. We are not aware that it was swept under the rug. 

What we are aware of is the information that we were able to obtain from the local police department and that there was action 

taken. 

Mr. LUETKEMEYER. But it is a crime. 

Mr. KIM. Rape itself is a crime, of course. 

Mr. LUETKEMEYER. Okay. So, we are allowing criminal activities 

to go on within the agency, if that is the case. 

Ms. MAINOO. Just to add to what Mr. Kim said, there were two 

reports of sexual assault at the Seidman Center. For one of those 

two sexual assaults reported, we understand from the FDIC’s Office of Inspector General that no charges were filed because the 

claims could not be substantiated by law enforcement. And as to 

the second incident, we understand from the Office of Inspector 

General that the investigation into that incident is ongoing, so we 

were not able to get more information about it. 

Mr. LUETKEMEYER. Does intimidation by the Chairman have 

anything to do with that not being taken up? 

Ms. MAINOO. There is no indication that the Chair is related to 

this. 

Mr. LUETKEMEYER. Okay. Very good. 

Mr. Hsu, you took part in the coup that occurred with Ms. Williams over a major disagreement of opinion over a merger issue, 

yet you have let this crime go unchallenged, sexual harassment 

and racial discrimination, which is documented, continue to go unchallenged. I am curious as to why we don’t take further action. 

It just boggles my mind, but it is about politics, pure and simple, 

in my mind. We have a Republican who is the Vice Chair, and if 

Mr. Gruenberg steps down, you will have a Republican as the 

Chair, and it is all about that. It is not about what is good for the 

people of the FDIC. It is not about what is good for the banking 

industry. It is about politics, and that is to say because both of you 

sit in position to stop the nonsense. Please do that on your—— 

Mr. HUIZENGA. The gentleman’s time has expired. The Chair recognizes the gentleman from Texas, Mr. Green, for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. I thank the witnesses for 

appearing today. Permit me to ask a question about the composition of the Board. Do you agree that the Board has some 5 members, Mr. Kim? 

Mr. KIM. The Board of the FDIC? 
24 

Mr. GREEN. Yes. 

Mr. KIM. Yes. 

Mr. GREEN. How many women are there among the 5 members? 

Mr. KIM. There are no women among the 5 members. 

Mr. GREEN. Five men? 

Mr. KIM. Correct. 

Mr. GREEN. I believe we live in a world where it is not enough 

for things to be right, they must also look right. By the way, no 

disrespect to any of my friends who are on the Board, I think highly of you, but it just seems to me that it may be time for us to look 

to have the leadership of a female. Permit me to ask you about the 

comment that you made. I believe it was you, Mr. McKernan, you 

made the comment of this being misogynistic. Explain, please? 

Mr. MCKERNAN. Explain what I mean by that? 

Mr. GREEN. Yes, sir. 

Mr. MCKERNAN. This is a characterization of the report, and 

when they describe the workplace culture, clearly, they may have 

other examples. But what I understand that to mean is that we 

have biases here slanted in favor of a male workforce. 

Mr. GREEN. You have heard the term, ‘‘good old boys.’’ 

Mr. MCKERNAN. Absolutely. 

Mr. GREEN. Is that what we are talking about? 

Mr. MCKERNAN. That is right. 

Mr. GREEN. Someone used the term, ‘‘patriarchal.’’ Would you 

speak up, ma’am? I believe you did. 

Ms. MAINOO. I did use that term, and that referred to conduct, 

including allegations that there are outdated notions of appropriate 

and inappropriate workplace behavior as well as favoritism and exclusion of women as well as members of underrepresented groups. 

Mr. GREEN. Now, ma’am, can you point to in your report where 

you indicate that a member of the Board should be made Chair of 

the Board? Can you? If you cannot, you may say, no. 

Ms. MAINOO. Could you rephrase the question? I want to make 

sure I understand it. 

Mr. GREEN. Can you point to some language in your report 

where there is an indication that a member of the Board should become Chair of the Board? 

Ms. MAINOO. We do not take a position in our report about who 

should be in leadership. 

Mr. GREEN. Your report doesn’t address that because that is beyond your mandate? 

Ms. MAINOO. It is beyond our mandate. 

Mr. GREEN. Absolutely, beyond your mandate, which means that 

you are not recommending that the Vice Chair become Chair of the 

Board, are you? 

Ms. MAINOO. We are not taking any position on who should be 

the Chair of the Board. 

Mr. GREEN. So when you say this should be done expeditiously, 

you are not indicating that it must be done expeditiously so that 

the Vice Chair can become Chair, are you? 

Ms. MAINOO. We are suggesting that our recommendations 

should be implemented expeditiously to improve the workplace culture at the FDIC. 
25 

Mr. GREEN. Exactly, but not such that a specific person can become Chair. 

Ms. MAINOO. We are not taking any position on whom should be 

Chair. 

Mr. GREEN. No position on the Chair? 

Ms. MAINOO. Correct. 

Mr. GREEN. In this toxic environment, with 5 men at the helm, 

can you find a reason why a woman should not become the next 

Chair in your report? 

Ms. MAINOO. Absolutely not. 

Mr. GREEN. It just seems to me that the President is trying as 

best as he can to do what someone said about a fresh start. Who 

made that statement? Raise your hand if you said, ‘‘fresh start.’’ 

Mr. MCKERNAN. Congressman, I believe that was me. 

Mr. GREEN. Yes, a fresh start. A fresh start, in my opinion, 

should include placing a woman at the helm as Chair. Now, this 

can be difficult for my colleagues across the aisle to embrace because we quite regularly have all men on our panels, and quite regularly I remind them that the reason we have females is because 

the Democrats will decide that we need to have some balance, but 

it is just not unusual to have all White men. This is not getting 

a feel of where we are. It is the mentality, and this mentality is 

pervasive not only on the Board of this FDIC, but this is something 

that we have to deal with across many, many lines. So, I want to 

go on record as supporting a female as the next Chair of the Board. 

I think it is time to do that. I yield back. 

Mr. HUIZENGA. The gentleman’s time has expired. The Chair will 

now recognize himself for 5 minutes. 

Ms. Mainoo, I have a question for you. I have just been kind of 

hearing between the lines from a lot of my colleagues on the other 

side and it seems like they think your report was somehow incomplete. Was it incomplete? 

Ms. MAINOO. No, our report—— 

Mr. HUIZENGA. Was it biased? 

Ms. MAINOO. It was not biased. 

Mr. HUIZENGA. Was it sensationalized? 

Ms. MAINOO. It was not sensationalized. 

Mr. HUIZENGA. So, you believe it is an accurate reflection of the 

leadership and the culture of what was happening at the FDIC? 

Ms. MAINOO. We do. 

Mr. HUIZENGA. Okay. I will note, by the way, that we had a 

woman Chair of the FDIC, the last Chair of the FDIC, and Mr. 

Hsu helped remove her, so when it comes to equity, we had that. 

I do want to say as well about the report, Ms. Mainoo or Mr. 

Kim, a number of the allegations seem to be sort of saying, well, 

there was a focus on one particular Chair, the current Chair. My 

reading of the report is that former Chairs, two women, by the 

way, were only mentioned in the report for the work that they did 

in attempting to improve the agency culture. Is that accurate? 

Mr. KIM. We make very clear in the report that the workplace 

culture and conduct issues were longstanding and probative. 

Mr. HUIZENGA. They were longstanding, and who was attempting 

to fix it? 

Mr. KIM. All Chairs have taken steps to seek to address them. 
26 

Mr. HUIZENGA. I understand your delicate position, Mr. Kim, but 

the simple fact is that you had an open-ended report. There were 

no problems with the other two female Chairs. There was a problem with this Chair. 

I am going to move on. A few weeks ago, the FDIC reported that 

the Board of Directors terminated the Special Review Committee, 

leaving the agency to handle matters of the independent review internally. The Board of Directors of the FDIC is supposed to set policy, oversee management, and protect the interests of employees. 

Director McKernan, what is the role of the Board in the day-today operations of the FDIC? You were starting to say you were advocating for that. 

Mr. MCKERNAN. Yes. When we terminated the Special Review 

Committee, I was of the view that we really needed to have the 

Board step up and take a more active role during the interim. One 

way to do that would be to establish a Board committee, only independent Directors, not representative management Directors, to 

oversee implementation of the action plan. 

Mr. HUIZENGA. Sorry. If Chairman Gruenberg didn’t see the cultural problems at the agency for 10 of his 13 years as Chairman, 

shouldn’t the Board be playing a bigger role in overseeing that cultural change? 

Mr. MCKERNAN. That is my view. 

Mr. HUIZENGA. Okay. What specifically can the Board do? 

Mr. MCKERNAN. One option would be to establish a Board committee. 

Mr. HUIZENGA. Okay. But that appears to be rejected by Mr. 

Hsu. Mr. Hsu, is that correct? 

Mr. HSU. I believe the full Board needs to be fully engaged in 

order to back the actions so that the actions that are taken to fulfill 

the recommendations are long-lasting, they are taken now, and 

they are conducted in full. 

Mr. HUIZENGA. Okay. So, based on the whistleblower reports 

both before and after the report, Chairman Gruenberg has not been 

protecting FDIC employees. They don’t have confidence in him. In 

fact, I think there was a Wall Street Journal article that literally 

the title of it was, ‘‘He Survived a Beatdown From Congress. Can 

He Survive One From His Own Staff?’’ 

Director Hsu, do you still believe, as you testified in May, Chairman Gruenberg can restore trust at the FDIC and lead changes in 

the culture during the remainder of his time, and, as I said in my 

opening, is he the right man at the right time with the right ideas? 

Mr. HSU. My focus is on the employees of the FDIC and delivering on the action. 

Mr. HUIZENGA. Is he the right person to lead this? 

Mr. HSU. As long as the Chairman is delivering on commitments 

and taking actions, I am supportive. It is conditional on taking 

those actions. 

Mr. HUIZENGA. I am taking that as a, yes. 

Ms. HSU. It is conditional on taking those actions. 

Mr. HUIZENGA. Okay. So, that is a conditional, yes. I am just not 

sure why you are so afraid of him, quite honestly, and why you 

can’t admit an obvious truth. That is disappointing because I know, 
27 

and I believe that the FDIC employees would disagree with you, 

that he is not the right person to be leading this. 

Director Hsu, I think it is finally time to become a more active 

Director. I think that your time and certainly your efforts in removing the last female Chair of the FDIC for what many of us believe was certainly far less than anything that is being accused or 

is being alleged right now, it is hard to view that as not for being 

for political purposes. And I would say it is time for you to step up 

and for you to be able to change that. Let’s do what is good for the 

employees. 

Mr. HSU. I have been completely focused on trying to establish 

three actions that are critical to reestablishing trust with the employees of the FDIC. 

Mr. HUIZENGA. My time is expiring, but you also need to remove 

the Chairman, and with that, I yield back. 

And the gentlelady from Ohio, Mrs. Beatty, who is also the ranking member of our National Security Subcommittee, is now recognized for 5 minutes. 

Mrs. BEATTY. Thank you, Mr. Chairman. And thank you, Ranking Member Waters. Let me just start by reminding my Republican 

colleagues that the hearing on Director Gruenberg was our last 

hearing where Democrats were very critical of him as well as 

Jelena McWilliams for failing to address the long-span culture of 

abuse. Republicans continued to place blame on Mr. Gruenberg. 

Well, he has resigned, and I applaud President Biden for putting 

a critical eye on identifying a person with the experience and background, and a person who has been tested and supported by Democrat and Republicans to be confirmed. And the next potential FDIC 

Chair that I think we are expecting to be nominated, Christy Goldsmith Romero, meets all of those standards, as we have heard before from our ranking member and others. Again, she meets all of 

those standards. If Republicans care about the organization, the 

people, and moving forward, then they would follow Democrats and 

put people over politics. 

I think that there is a lot of hypocrisy, in my opinion, Mr. Chairman, here of Republicans being outraged by sexual harassment, 

misconduct in this context, but not in other contexts. My senior Republican colleague from Missouri asked the question about rape 

and if rape was a crime, and it was answered by our expert witness 

as, yes. But I don’t see, Mr. Chairman, Republicans calling for the 

resignation or removal of your last Party leader for the exact same 

conduct that Mr. Trump had, which is hypocrisy. 

Now, I think it is very interesting that you asked the witness or 

you stated that he was afraid of the Director. So let me say to my 

Republican colleagues, why are you so afraid of Mr. Trump? If it 

is in alignment to say that he is afraid of someone that he had to 

work for, and Mr. Trump has done many of these same things— 

and I am within Rule 17, which I just took the last 20 minutes to 

read, Mr. Chairman—as much as anybody else over there has said 

and talked about President Biden. So, I think it is interesting. I did 

not hear you answer the question about if you are afraid or ever 

felt afraid, so I am going to extend it. Have you ever felt threatened or afraid of the Chair? 

Mr. HSU. No. 
28 

Mrs. BEATTY. And to your Republican colleague, have you ever 

felt threatened or afraid of the Chair? 

Mr. MCKERNAN. No, Congresswoman. 

Mrs. BEATTY. Okay. Thank you. Now, let me go to another question. I want to thank my colleague, Mr. Green, who talked about 

having a female Chair, and I am sure he was speaking in the spirit 

of diversity and inclusion. To the Acting Comptroller, I would like 

to start with you to understand the diversity and inclusion efforts 

at the FDIC. Staff diversity at this prudential regulatory agency, 

I believe, continues to lag. It is clear that it is not just diversity, 

but it is also inclusion, and it must be improved, I believe, for not 

only women, but for people of color. I think it is important when 

you talk about the culture that people come from, whether it is 

rural America, whether it is suburban, so it is not just race and 

gender. It is far more than that. What steps could you tell us that 

the FDIC is taking to do that, especially at the GS-15 level? And 

we only have about 30 seconds. I am going to give you each 10 seconds, and if you don’t know, say you don’t know. 

Mr. HSU. I believe the action steps that are laid out in the agency’s action plan, as well as the recommendations that are there in 

the report, will go a long way to creating the environment that will 

enable—— 

Mrs. BEATTY. So, you think there is enough in the report that 

will address it? 

Mr. HSU. It is a starting point. 

Mrs. BEATTY. Okay. Mr. McKernan? 

Mr. MCKERNAN. Congresswoman, I agree. I certainly support 

your point here around the need to really foster more diversity and 

inclusion at the agency. I think we have a good program in place 

currently to both recruit and retain—retain is a really key point. 

Mrs. BEATTY. Okay. I only have 2 seconds, so you can give me 

a written answer. Are there two top recommendations that you 

would give? My time is up, so you can submit it in writing. 

Mr. HUIZENGA. The gentlelady will take that in writing, as she 

had indicated. 

The gentleman from Kentucky, Mr. Barr, is recognized for 5 minutes. 

Mr. BARR. Thank you, Mr. Chairman. As you all know, on May 

20th, Chairman Gruenberg announced that he would resign after 

the Biden Administration nominates and the Senate confirms his 

new successor. Given the culture and the toxic workplace environment, that is a very swamp-like thing to do. This is why the American people hate Washington, D.C., because it is not a resignation; 

a resignation should have come months ago. And in fact, according 

to a Wall Street Journal article, Mr. Gruenberg himself suggested 

he is staying because if he leaves, the agency will have 2 Democrats and 2 Republicans. This is supposed to be an independent 

regulatory agency, not a partisan agency, but Mr. Gruenberg is 

saying the reason he is not resigning is because, oh my gosh, it is 

no longer going to be a partisan majority. That means he is more 

concerned about threats to the Biden Administration’s partisan 

regulatory agenda than he is about cleaning up the mess he created. 
29 

Mr. Hsu, do you believe that you have a responsibility as an 

FDIC Board member to protect the independence and credibility of 

the FDIC as an institution, and not the partisan makeup of the 

FDIC? 

Mr. HSU. The independence of the FDIC is critical, just as critical as taking actions to protect the employees of the FDIC. 

Mr. BARR. Resigning now is how you protect the employees of the 

agency, not after the Biden Administration can protect its partisan 

majority. Let me ask you this, Director McKernan. Have you heard 

from employees at the FDIC following Chairman Gruenberg’s announcement that he would retire later instead of now? 

Mr. MCKERNAN. Have I heard from them? Yes. 

Mr. BARR. And tell me, what have they told you? Are they able 

to carry out their work without distraction? 

Mr. MCKERNAN. I would say the universal view. There are a lot 

of views about the report, but universally, they are exhausted and 

distracted. 

Mr. BARR. Are employees able to effectively do their jobs? 

Mr. MCKERNAN. I think it is a significant headwind. 

Mr. BARR. In your opinion, how does the failure of Mr. 

Gruenberg to resign today prevent the FDIC from meeting its responsibilities as an independent Federal regulator? 

Mr. MCKERNAN. Congressman, as I have said, we need a fresh 

start sooner rather than later. That is important to establish credibility. It is important to bring in someone who has the moral authority to really push change, and it is important so we have clean 

hands to sort of deal with our legacy issues. 

Mr. BARR. I will stick with you, Director McKernan. Last month, 

the FDIC announced that there are 63 banks at the brink of insolvency in the United States. The commercial real estate office situation is a problem. I don’t think it is systemic, but I think the FDIC 

is going to have a lot of important work to do with distressed banks 

that are overexposed to commercial real estate in a high-interestrate environment over the next several years. Resolution of those 

institutions is going to be important for the stability of our financial system. In your judgment, is the safety and soundness of our 

system threatened by this distraction of Chairman Gruenberg 

hanging on to power, and can he manage these risks that are coming at us like a freight train? 

Mr. MCKERNAN. The distraction certainly does not help. That is 

why I say we need a fresh start. 

Mr. BARR. I think that is really important. That is the important 

point here. It is important to change the culture and clean up the 

toxic culture there and get morale and retention of examiners and 

recruiting of new examiners to do that. But the job at the FDIC 

over the next couple of years, when we have a wave of defaults in 

commercial real estate and some of these banks that are overexposed, the FDIC has a big job ahead of it. And every day that 

goes on that Mr. Gruenberg is there jeopardizes the safety and 

soundness of our financial system. The FDIC needs to be on the 

ball right now. 

And I will finish with Comptroller Hsu. On May 15th, when you 

last appeared before us with Mr. Gruenberg, Mr. Meeks asked you 

whether you thought that the Chairman could restore trust and 
30 

credibility at the FDIC. You testified that you thought he could, 

and then you answered Mr. Huizenga, ‘‘based on certain conditions.’’ I asked you, given his history of hostile behavior, you passed 

it off as passion, just passion, but you finally admitted the issues 

are severe. Recall the independent report that you oversaw with 

Director McKernan. Is it still your testimony that you believe 

Chairman Gruenberg can restore trust and credibility at the FDIC? 

Mr. HSU. I believe we need to take action right now with regards 

to changing the structure of the agency, getting a third-party expert, and hiring an independent monitor. 

Mr. BARR. So, do you agree or disagree with the findings of the 

report that you oversaw? 

Mr. HSU. I agree with all the findings of the report. 

Mr. BARR. Okay. Why shouldn’t Mr. Gruenberg step down immediately? 

Mr. HSU. My focus is on the action. 

Mr. BARR. Well, your focus should be on the leadership that has 

caused the problem, and he needs to resign now. I yield back. 

Mr. HUIZENGA. The gentleman’s time has expired. With that, the 

gentleman from Illinois, Mr. Foster, will be recognized, but I do 

want to remind my colleagues, and I will do this periodically, that 

under Rule 17, Members, the President, and the presumptive nominee of both parties, the Presidents are protected. Members will refrain from engaging in personalities. In other words, if it is about 

policy and legislation, it is fine. 

With that, Mr. Foster, you are recognized for 5 minutes. 

Mr. FOSTER. Thank you, Mr. Chairman, and I have to say that 

I concur, and I look forward to my Republican colleagues encouraging their Senate colleagues to rapidly confirm the replacement 

for Mr. Gruenberg. 

I think I speak for many members of this committee when I say 

that I was appalled by the findings of the Cleary report. It painted 

a picture of an agency plagued by a toxic culture that has allowed 

inappropriate workplace conduct to persist for far too long without 

accountability. And it is appropriate to bring in new leadership to 

the FDIC that has a demonstrated commitment to addressing these 

issues and the credibility to instill positive change at an agency 

that has long struggled with these issues that we are discussing 

today. I encourage the Biden Administration to quickly nominate 

a new FDIC Chair, which I understand is underway, and for the 

Senate to confirm them without delay. 

From my experience as a business owner and as an organization 

leader, I know that culture starts at the top. Many current and 

former FDIC employees bravely shared their stories for this report, 

and it is important that swift action be taken to show them that 

their voices have been heard. The action plan that was put forward 

last December, and the recommendations in the Cleary report, are 

important steps, and I encourage future FDIC leaders to dutifully 

implement those recommendations and the other changes that may 

prove to be necessary. 

But I would be interested in what timescale we can expect for 

these changes, and I will start with this. Acting Comptroller Hsu, 

and Mr. McKernan, as Directors of the FDIC, you have experienced 

the fact that data on misconduct throughout the organization has 
31 

not been collected regularly or uniformly. So my question is, has 

this been fixed? It has not been regularly provided, apparently, 

even to Directors and senior management. This issue was highlighted in both the Inspector General’s 2020 evaluation and the 

Cleary report. First, do you believe this was an impediment to your 

understanding of the full scope of what has been going on, and second, is that part at least fixed today? If there is a complaint that 

comes in today, is it being logged in a systematic manner? I will 

start with Acting Comptroller Hsu. 

Mr. HSU. Thank you very much for the question. I think, as has 

been highlighted previously, recordkeeping challenges at the agency have been an impediment to having the proper culture and the 

structure to be able to deal with these issues. That is one of the 

recommendations that has to be pursued. There are some predicates before we can get to that, though. There needs to be a thirdparty expert, there needs to be an independent monitor, and there 

needs to be a safe reporting channel for all employees so that recordkeeping can be addressed in due time, and so that all of these 

recommendations can be implemented in full. We are going to do 

that as quickly as possible. 

Mr. FOSTER. Yes, but in the interim, are there any improvements 

that have been made in the recordkeeping and reporting? Has at 

least a memo gone out to everyone, hey, do something better than 

you have been doing so that whomever comes in to finish cleaning 

up the situation will say, here is a comprehensive list of everything, every complaint that has been received for the last 6 months 

or whatever? 

Mr. HSU. Yes. I believe that in the agency’s action plan, there are 

sub-action plans within that. Those have been assigned. There are 

sponsors. There are deadlines. I believe that recordkeeping has 

been part of that. I don’t know if Director McKernan has others. 

Mr. FOSTER. Yes. 

Mr. MCKERNAN. No, I think I concur with that. The only thing 

I might add here is that even if we have the most-ideal reporting 

mechanism and recordkeeping mechanism in place, it is not going 

to work if people are afraid of retaliation. That is not policies, procedures training. That is a change in values, and that is going to 

be something that is going to have to be like a cycle that builds. 

We are going to have to show that through discipline and by empowering people to do it well. 

Mr. FOSTER. And reporters, people who are thinking of reporting 

something will look at whether other people who report them actually get their complaints addressed or whether they are swept 

under the rug. So, it is going to be the work of years to let everyone 

understand that it is an organization that takes these complaints 

seriously. Can you give me some idea of the timescale? When 

should we really expect measurable changes in the organization, 

assuming that all of these are implemented? 

Mr. HSU. Sir, your point about trust is really critical. There is 

a reason that FDIC employees have been skeptical of these efforts 

in the past, and that trust is going to be established through consistent actions over time that show that it protects them. In this 

process that we established for the hotline that Cleary ran, there 

was skepticism about using the hotline for some time. It took time 
32 

for brave employees to come forward and use it and realize, okay, 

this is different, I can trust this. They could tell their colleagues, 

and those hotline calls, the hotline usage improved over time because people trusted it. We need to do the same as an agency. That 

is why it is so critical that we stand up these new structures immediately with urgency, that they are credible, and that people don’t 

have that fear of retaliation. 

Mr. FOSTER. Yes. And we have to monitor that as the hotline—— 

Mr. HUIZENGA. The gentleman’s time has expired. 

Mr. FOSTER. Thank you, and I yield back. 

Mr. HUIZENGA. And with that, the gentleman from Texas, Mr. 

Williams—the skipper of the Republican baseball team, and we 

have a big game tonight—is recognized for 5 minutes. 

Mr. WILLIAMS OF TEXAS. You are going to do well tonight. Thank 

you for that introduction. 

Director McKernan, last November, after The Wall Street Journal published the first article about the FDIC’s culture, Chairman 

Gruenberg announced that he made the decision to hire 

BakerHostetler to conduct a top-to-bottom assessment of workplace 

culture issues at the FDIC that same day. When the second Wall 

Street Journal article came out detailing Chairman Gruenberg’s 

misconduct, the FDIC Board of Directors instead created a Special 

Review Committee and appointed you and Director Hsu as its coChairs. So, Director McKernan, did Chairman Gruenberg participate in any decisions made by the Special Review Committee? 

Mr. MCKERNAN. No. 

Mr. WILLIAMS OF TEXAS. Why didn’t he participate? 

Mr. MCKERNAN. I think it is important for the independence of 

the process that this be a process overseen entirely by independent 

Directors. 

Mr. WILLIAMS OF TEXAS. Okay. Chairman Gruenberg was excluded from the Special Review Committee and was removed from 

the creation of the action plan because he is part of the problem 

at the FDIC. Now, through our committee’s investigation, and the 

Cleary report, we have seen multiple instances of bullying and misconduct from the Chairman himself. If he wasn’t fit to be part of 

these initial process or culture changes, wouldn’t you agree that 

there is a concern that he is not properly leading the implementation of the action plan and Cleary Gottlieb’s recommendations? 

Mr. MCKERNAN. Congressman, I think it is an important point. 

Like I have said, I have been advocating for the Board to take a 

more active role for these and related considerations. I think there 

is a question here about what is the right governance of our action 

plan going forward. 

Mr. WILLIAMS OF TEXAS. It is appalling to me that he would even 

consider attempting to be part of the solution when he is part of 

the problem. 

Mr. Kim, one of Cleary’s recommendations is for the FDIC to 

hold leadership accountable. Can you talk about why this recommendation is necessary at all levels for a true cultural change 

at the agency? 

Mr. KIM. We have set forth in the report our finding that these 

workplace conduct and culture issues have been longstanding and 

persistent. And as a result, we believe that the recommendation 
33 

needed to include transformation of culture and structure beyond 

just improved trainings or policies, and as a result, that was our 

recommendation. Our recommendation is that the organization, including its leaders and managers, need to recognize the need for 

this transformation, cultural and structural. We did not take and 

do not take a view as to whether any particular leader or Chair 

should or should not remain at this FDIC. That was not in our 

mandate, nor do we believe we have the authority to make such 

a decision or recommendation. 

Mr. WILLIAMS OF TEXAS. On May 20th, Chairman Gruenberg 

said that he would resign from his role as Chairman after President Biden and the Senate have nominated and confirmed his successor. We have been talking about that today. This is unacceptable and a clear political decision by the Biden Administration. 

Cleary’s report has shown that the employees at the FDIC have 

zero faith—zero, I repeat—in their current Chairman, and Chairman Gruenberg’s decision is insulting to those whom his actions 

have directly affected. 

Director McKernan, how does this hinder the FDIC from fulfilling its duties, and what particular challenges does this create 

for the FDIC in effectively overseeing and managing financial institutions? 

Mr. MCKERNAN. Congressman, the morale at the FDIC is bad. 

That is not good for our ability to execute on the mission. We have 

great staff. They are going to keep pushing forward, but we 

shouldn’t create headwinds through that. I think also going, forward, longer term, if the state of affairs at the FDIC is not fixed, 

it is going to be a real problem for the retention and recruitment 

of new staff, and that will be fatal to our ability to achieve our mission if we can’t fix that. 

Mr. WILLIAMS OF TEXAS. I am a small business owner, and I 

know if your employees don’t have faith in leadership and trust, it 

is not ever going to work, and you have a real issue here. 

With that, I have a minute to go. Mr. Chairman, and I would 

yield my time back to you if you would like it. 

Mr. HUIZENGA. I would appreciate that. Mr. McKernan, we were 

starting to explore some of those changes. I will ask you the same 

question I asked Mr. Hsu, which is, do you believe that Mr. 

Gruenberg is the right man, at the right time, with the right ideas, 

to be able to lead the FDIC into a new place? 

Mr. MCKERNAN. As I said, I think we really need a fresh start, 

and sooner rather than later. 

Mr. HUIZENGA. It feels like a little like saying I am resigning, but 

I am actually not resigning. It is a little like a Member of Congress 

saying, well, I am not going to serve in Congress if the people who 

elect me don’t elect me. Of course, there is a simple thing that this 

President could do, which is remove Mr. Gruenberg, and we could 

start on that fresh start, could we not? 

Mr. MCKERNAN. I take your point. I do think it is really ultimately a question for our elected leaders, but if I am asked, my 

focus is on what is in the best interest of the agency, and I think 

that is clear. 

Mr. HUIZENGA. Okay. My time has expired. The gentleman from 

California, Mr. Vargas, is recognized for 5 minutes. 
34 

Mr. VARGAS. Thank you very much, Mr. Chairman. First of all, 

I want to thank the Chair. We did ask for a hearing, and he provided one, so I want to thank the Chair and the ranking member, 

so we could ask these questions. I appreciate it very much. 

At the beginning, Mr. Speaker, actually you said culture starts 

at the top. I agree with that. Culture starts at the top. And Mr. 

McKernan, you said values are set by our leaders. I think that is 

correct. I take a look here at Rule 17, under Decorum and Debate, 

and it says, ‘‘Members shall be confined to question under debate, 

avoiding personality.’’ It doesn’t say that you can’t talk about convictions, that you can’t talk about court cases. In fact, you can. I 

don’t see why you cannot. I think that allows for it, Mr. Speaker. 

Mr. HUIZENGA. Well, I appreciate the upgrade, but it is Mr. 

Chairman—— 

Mr. VARGAS. Mr. Chairman. 

Mr. HUIZENGA. ——not Mr. Speaker, and I am happy to address 

that, that there was no discussion. I am saying—— 

Mr. VARGAS. Right. No, the reason I say that is because another 

Member said that is one of the reasons that people hate Congress 

is because of the, ‘‘swampy move,’’ by Mr. Gruenberg. Now, by the 

way, my dad, a great guy who unfortunately passed away a few 

weeks before I joined Congress, taught me one thing. He said, 

‘‘Never defend, son, the indefensible.’’ So, I am not going to defend 

Chairman Gruenberg because I think it is indefensible, personally. 

I am not going to defend him. 

But I will defend, obviously, the decisions that we are making 

here. And how do you defend others when you are talking about 

how culture starts at the top, and then you say that people hate 

Washington because we are, ‘‘swamping,’’ because we are hypocrites? When you say that culture starts at the top, and you take 

a look at who is at the very top, and you take a look at convictions, 

you will take a look at court cases, and then you say, that is fine, 

we are going to look away, that is fine. 

But this Chairman, we are going to hold accountable and hold 

both accountable. By the way, I personally don’t think Chairman 

Gruenberg should be there either, but the hypocrisy that I hear on 

the other side really is stunning, just stunning on this issue because of the court cases. And it is not my decision, but the decisions of jurors and judges who made those decisions. 

All of that being said, I do think that there is a problem here, 

and I thank you for the work that you have done as attorneys, and 

I thank you for the work that you have done as Board members. 

I think you have worked hard. Now, obviously, recommendations 

were made in 2020, and they weren’t fulfilled, because, again, we 

talk about people being afraid of retaliation. Why do we think it 

is going to work this time? 

Mr. Kim, I think I will go to you because you are the one who 

headed up the investigation. Go ahead, sir. 

Mr. KIM. Yes. We did find that a number of the findings in the 

2020 OIG report remained issues, and that is partly what led us 

to the finding that these are issues that have been longstanding or 

deep-seated, which is why, based on the findings, we wanted to put 

in the report sufficient information so that the reader can get a fla-
35 

vor of what it is that we heard. And we did hear, on a regular 

basis, the fear of retaliation. 

Mr. VARGAS. And it was your testimony, I believe, that a lot of 

the people who came forward were women and underrepresented 

minorities. Was that your testimony? 

Mr. KIM. That is correct. 

Mr. VARGAS. Okay. And why do you think that is the case? 

Mr. KIM. Because I think women and underrepresented minorities have been, at the FDIC and elsewhere, more susceptible to 

misconduct as well as victims of a culture that is patriarchal or insular. 

Mr. VARGAS. Sort of the, ‘‘good old boys network,’’ that was spoken about at the beginning? 

Mr. KIM. That is what we heard in our review. 

Mr. VARGAS. And most of it was in the offices away from Washington? 

Mr. KIM. It was both. As we set forth in the report, we received 

reports from all of the divisions, and all of the districts, but as we 

noted in the report, some of the issues with respect to fiefdoms and 

the like were more prevalent in the field offices than in headquarters. 

Mr. VARGAS. Okay. Again, I have 30 seconds left. I want to thank 

you for your work. I do think we should move forward. I don’t think 

that it is defensible to defend Chairman Gruenberg, I don’t, and I 

think that the things that were said at the beginning were absolutely true. Culture starts at the top, so does character, and I think 

we need to change there. And I wish that my colleagues on the 

other side would listen to their own words. Thank you very much. 

I yield back. 

Mr. HUIZENGA. The gentleman yields back. The gentleman from 

Ohio, Mr. Davidson, who is also the Chair of our Housing and Insurance Subcommittee, is recognized for 5 minutes. 

Mr. DAVIDSON. Thank you, Mr. Chairman. And thank you to our 

witnesses. Mr. McKernan, I thank you for the work to highlight 

some of these issues. In your opinion, can an effective top-to-bottom 

cultural change be made at the FDIC while Martin Gruenberg is 

Chairman? 

Mr. MCKERNAN. I don’t think we can have real culture change 

until we have that fresh start. 

Mr. DAVIDSON. That has been my experience, whether it was in 

the military, or in business, or frankly, here. You can update the 

human resources manual, you can write new standard operating 

procedures, you can train them all you want. Sometimes you just 

have to change the people, and it seems clear that we need to do 

that. What is the delay? Director Hsu, why the delay? Why should 

we tolerate Mr. Gruenberg sticking around through the rest of the 

afternoon? 

Mr. HSU. At the Board, we are not delaying. We have taken steps 

already to hire an independent third-party expert, an independent 

monitor, and to restructure the reporting lines for incidents. Those 

are all actions that are required to reduce the fear of retaliation, 

to ensure that we have the right outside expertise so we can make 

the changes that are necessary. 
36 

Mr. DAVIDSON. So, you are outsourcing the leadership challenge 

to some third party and then you are going to put a Director in to 

implement what the third party came up with? 

Mr. HSU. The purpose of engaging with the outside parties is to 

make sure that we have the best expertise from outside. We have 

to do this differently. 

Mr. DAVIDSON. Why not just hire a good leader? 

Mr. HSU. We have to do this differently than in the past. We 

want to make sure that we have the right plan and that we are 

implementing those steps immediately. 

Mr. DAVIDSON. It sounds to me like the plan is that we are going 

to come up with a committee that is designed to delay action while 

Mr. Gruenberg rides out the rest of the Biden Administration and 

continues his time there. 

Mr. McKernan, how long has Director Gruenberg been at the 

FDIC? 

Mr. MCKERNAN. Twenty years, as I understand it. 

Mr. DAVIDSON. Twenty years. How long has he been leading it? 

Mr. MCKERNAN. Ten of the last 13 years. 

Mr. DAVIDSON. Ten of the last 13 years, he has been leading it. 

Do you think he has had anything to do with poisoning this culture? 

Mr. MCKERNAN. I think the Chairman is ultimately accountable 

for the culture. 

Mr. DAVIDSON. Generally, that is the answer. Everything that 

happens or fails to happen in an organization is ultimately the top 

leader’s responsibility. That doesn’t mean he is the one who did everything, but, ultimately, that is the duty of leadership, and anyone 

can find an excuse. It seems like Mr. Gruenberg is full of them. 

Leaders find a way. 

Director Hsu, do you think Mr. Gruenberg is going to find a way? 

Mr. HSU. Again, I am focused on what I can control—— 

Mr. DAVIDSON. If you give him a good, outside, third-party, 

outsourced solution, do you think he could follow it with any credibility? 

Mr. HSU. The purpose of having the outside expertise is to make 

sure that the agency is doing the best it can for the employees of 

the agency. 

Mr. DAVIDSON. What is the due date for that, around January 

21, 2025? 

Mr. HSU. No, it is right now. We have to do these things right 

now. 

Mr. DAVIDSON. I know we do, but you are outsourcing it to some 

third party. They are supposed to get back to you around January 

21st? 

Mr. HSU. No, the hiring of the third party, both the expert and 

the monitor, is currently in process right now, and we are also 

going to restructure the broken internal process that has led to retaliation. 

Mr. DAVIDSON. It might take until January 21st to get rid of Mr. 

Gruenberg, but I am pretty sure it will be done right around that 

time frame, if not before. 
37 

Mr. McKernan, is there anything that we could do between now 

and January 21st to facilitate Mr. Gruenberg’s departure at the 

FDIC? 

Mr. MCKERNAN. I don’t know that I can speak to that, but I 

think it is important that Congress continue to exercise its oversight role to hold us accountable, including the Board, for making 

real, actionable steps to get culture change moving. 

Mr. DAVIDSON. Obviously, the President of the United States 

could fire him. That would be great. No leadership coming from 

there, but Congress has the power of the purse. We are only funded 

until September 30th. In theory, we could eliminate funding for 

Mr. Gruenberg’s position beginning on October 1st of this year. We 

have an opportunity coming up in the appropriations process. We 

have a Holman rule that would facilitate just such an action directed at Mr. Gruenberg. Does anyone believe that would be appropriate to provide congressional accountability for Mr. Gruenberg? 

Do you think we should keep him in place, or do you think we 

should continue to pay him? We are the ones who provide the funding for his paycheck. Should we keep him on the United States 

payroll? 

I was really encouraged to hear Mr. Vargas talk about not defending the indefensible, but if we fund his paycheck into the next 

fiscal year, we are defending the indefensible. We shouldn’t provide 

a dime to Mr. Gruenberg. So, I hope my colleagues will defend his 

payroll, and I hope it is a moot point because Joe Biden could fire 

him this afternoon, and that would be the appropriate action. Anywhere else, anyone doing these kinds of things would be walked out 

with a cardboard box that afternoon. And I hope that becomes the 

norm within the FDIC to not tolerate these kinds of things, whether it is of the employees or the subordinate leaders who make up 

the chain of command. We need to fix this culture, and Congress 

can do that by holding Gruenberg accountable with appropriations. 

I yield back. 

Mr. HUIZENGA. The gentleman’s time has expired. The gentlewoman from Texas, Ms. Garcia, is recognized for 5 minutes. 

Ms. GARCIA. Thank you so much, and thank you to the witnesses 

for being here. First I want to start with Ms. Mainoo. You said 

something that caught my ear at the beginning. You said that this 

has gone on for far too long. I think that is your quote, and then 

you went further and said that this was longstanding and deeply 

ingrained. So if it goes back to the 1980s, have you been able to 

age any of the 500 complaints, like how many were in the 1980s 

and the 1990s and the 2000s, 2010s, and 2020s, so that we can get 

a better idea of how ingrained it is? 

Ms. MAINOO. To give a better idea of our findings, we included 

in our report what we thought was necessary to understand our 

findings and support our recommendations. 

Ms. GARCIA. The question is, did you age the findings? Okay. Let 

me ask you this, were there more prior to 2000, or were there more 

in the 1980s? 

Ms. MAINOO. In the representative examples, the nearly 50 representative examples we included in the report, where we had 

dates—— 
38 

Ms. GARCIA. What dates are you referring to, because I know 

that a lot of the samples, a lot of pages are like this, they are redacted, okay? There are redactions in probably 5, 6, 10 pages. So, 

it says examples on page A4, but I have, like, 2 pages of redactions. 

Ms. MAINOO. Right. What I was saying was that—— 

Ms. GARCIA. I am just trying to get an idea, ma’am. It is a simple 

question. Did you age the allegations? It really is a yes-or-no answer. 

Ms. MAINOO. We aged allegations and most of the examples in 

the appendix that you are just referring to, where there are dates, 

most of those are from within the past 5 years. 

Ms. GARCIA. Five years, okay. That is good to know because it 

struck me that the OIG report did make a recommendation regarding this back in 2020, suggested that the FDIC develop a more-formalized strategy to promote a harassment-free workplace. In response, the agency wrote, and again, this was in 2020, ‘‘The FDIC 

disagrees that development of a new strategy is required because 

the FDIC currently has a robust, multifaceted strategy in place designed to promote a culture of diversity and inclusivity in an environment in which harassment is not tolerated.’’ So, they thought 

everything was hunky-dory apparently in 2020. Do you recall who 

the Chair was then? 

Ms. MAINOO. The Chair in 2020 was Chair McWilliams. 

Ms. GARCIA. Okay. So, it was not Mr. Gruenberg? 

Ms. MAINOO. Correct. It was not Mr. Gruenberg who was the 

Chair, then. 

Ms. GARCIA. So when he came in following Chair McWilliams, he 

saw the OIG report that said, we disagree, we are doing fine, we 

don’t need a new strategy. That sort of kind of caught my attention 

because there seems to be so much focus and, well, it should be on 

the current Chair, when, in fact, there have been other previous 

Chairs, both Democrat and Republican, appointed by both Democrat and Republican Presidents. So, it is a problem for the agency 

and it is something that needs to be worked on, but it seems like 

the agency has resisted some of this. 

Mr. McKernan, you have been on now for how many years? 

Mr. MCKERNAN. About a year and a half. 

Ms. GARCIA. Okay. I know you have said even today that the 

Board bears responsibility and that the Board should be more involved. So, in your 11⁄2 years, what have you done or what have 

you initiated to take care of some of these issues that you yourself 

say we need to take steps to address? What steps have you taken, 

sir? 

Mr. MCKERNAN. When the reports came out in the press in November, I had been there about, I guess, 10 months, and what I 

did was champion an independent review. We initially had a review that was going to be overseen by the Chairman and staff. 

That review was, candidly, very narrow in scope, with a very limited budget. It was not a real review. It was not a top-to-bottom 

review. I found that very objectionable, and worked very hard on 

the Board to get us to do a real review, an independent review. Director Hsu was very constructive to that end, and now we are here 

today talking about that review. 
39 

Ms. GARCIA. Is there anything else you have done that you can 

share with us? 

Mr. MCKERNAN. Currently, we are having a relatively contentious debate on the Board about exactly what the Board’s role is 

going forward. I am one vote among five. I think we need to really 

reconsider how the Board approaches the oversight of the action 

plan. 

Ms. GARCIA. Thank you. Mr. Chairman, I ask unanimous consent 

to enter into the record an article from Bloomberg entitled, ‘‘Biden 

Is Poised to Pick Goldsmith Romero to Lead Overhaul at FDIC.’’ 

Mr. FLOOD. [presiding]. Without objection, it is so ordered. 

Ms. GARCIA. Thank you. 

Mr. FLOOD. The gentleman from West Virginia, Mr. Mooney, is 

now recognized for 5 minutes. 

Mr. MOONEY. In West Virginia, we have a lot of small banks. I 

met with some of them last year after the Silicon Valley Bank was 

given the systemic risk exception. Most of them were of the view 

that no banks in West Virginia would have been given that exception. It is my first chance to speak to folks from the FDIC since 

then. So, my questions are really directed at Mr. McKernan and 

Mr. Hsu about the Silicon Valley Bank. 

The Silicon Valley Bank was a comparatively smaller financial 

institution, and many policymakers and politicians were skeptical 

about invoking the systemic risk exception for Silicon Valley Bank, 

while others, particularly those with large ties to interests in the 

Silicon Valley, supported making the bank’s accountholders completely whole. Isn’t it true that the Silicon Valley Bank was not an 

obvious candidate for the invocation of the systemic risk exception, 

Mr. Hsu? 

Mr. HSU. The FDIC Board decided unanimously to invoke the 

systemic risk exception at that time based on a lot of analysis and 

discussion. 

Mr. MOONEY. Mr. McKernan? 

Mr. MCKERNAN. I would certainly agree, Congressman, that it 

was not an obvious candidate, and that was probably one of the 

harder decisions I have had to make in my life. And candidly, I 

wouldn’t begrudge anyone who wants to criticize me for it, because 

depending on what side of the bed I wake up on, I sometimes wonder if I made the right decision. 

Mr. MOONEY. I appreciate that. I know we make the laws here, 

and you do your best to implement them, and there are a lot of 

gray areas in that, but let me ask a follow-up question. Isn’t it also 

true that as a part of the analysis regarding the invocation of the 

systemic risk exception for Silicon Valley Bank, that an important 

concern relayed to the FDIC was a special decision was made that 

it would be important to prevent money from going to Chinese interests? What did the FDIC do to analyze whether the FDIC would 

be funding Chinese interests and how did the FDIC go about preventing it? Mr. McKernan? 

Mr. MCKERNAN. Congressman, I can’t speak to that. I am happy 

to take that question back, but that was certainly not something 

I was looking at, at the Board. What was central to my decisionmaking is we had also Signature Bank that same weekend, and although it was not obvious to others at the time, First Republic 
40 

Bank was right there as well. I put the three together, which was 

really what got me to, ‘‘yes.’’ 

Mr. MOONEY. Okay. Mr. Hsu, any thoughts on that? 

Mr. HSU. I would have to get back to you to as to your question. 

Mr. MOONEY. Okay. I have also been alerted to the fact that the 

FDIC chose to insure certain foreign euro-dollar sweep accounts for 

a failed bank, which would be in violation of 12 CFR Section 360.8, 

which expressly states that the insurability of funds associated 

with sweep accounts maintained by foreign branches is to be determined as of the end-of-business status of the funds. Instead, the 

FDIC chose to interrupt the cycle and pay out the accounts as if 

the money was stationary in the United States. Why did the FDIC 

bend the rules on that? 

Mr. MCKERNAN. Congressman, that is another question I will 

have to take back. 

Mr. MOONEY. Okay. I have time for one more question. Going 

back to the earlier discussion, if Mr. Gruenberg were to step down 

and the current Vice Chairman becomes the Acting Chairman, 

would the FDIC continue to function and carry out its mission? Yes 

or no? 

Mr. MCKERNAN. Absolutely. The FDIC has functioned without a 

full Board for quite some time. 

Mr. HSU. Yes. 

Mr. MOONEY. Anybody else want to opine on that one? 

[No response.] 

Mr. MOONEY. Let’s just say the bylaws clearly state that there 

is a solution in place if Mr. Gruenberg were to step down and resign today. He has already told the staff they need to prepare for 

him to stay through the end of the year. The staff went from hoping for a fresh start to now being stressed about the future of the 

agency, defeated and unable to adequately do their jobs, so that 

would be a good option, I would say. Mr. Chairman, that is really 

it for my questions. I yield back the balance of my time. 

Mr. FLOOD. The gentleman yields back. The gentlewoman from 

Massachusetts, Ms. Pressley, is now recognized for 5 minutes. 

Ms. PRESSLEY. Thank you, Mr. Chairman, and thank you all for 

being here. 

First, I want to say I am encouraged to see a more-representative 

table today. I am glad that there is a woman at this table and that 

there is diverse representation at this table, given the experiences 

both of racial discrimination, microaggression, hostilities, and also 

sexual harassment. I remain deeply concerned about accountability 

and recourse following the inaction to address essential workers’ 

rights at the FDIC. I did not parse words when Mr. Gruenberg was 

before this committee, and I certainly won’t today. I appreciate that 

he has taken the appropriate step of tendering his resignation effective immediately following Senate confirmation of his successor. 

Let me be clear. Those on the other side of the aisle do not come 

to this conversation in good faith. They see an opportunity to gut 

critical Federal regulatory work, and they are going after it. That 

aside, let me be clear. The FDIC must prioritize recourse for workers and accountability for wrongdoers. 

Mr. Kim, based on this report, it is just not clear to me who at 

the FDIC directly contributed to the recommendation section. 
41 

Mr. KIM. Sorry. Who directly contributed to the recommendation 

section? 

Ms. PRESSLEY. Yes. 

Mr. KIM. The report was entirely the work of the Cleary Gottlieb 

team, and we both reached our factual findings and the analyses 

and developed the recommendations. 

Ms. PRESSLEY. Okay. Let me just unpack that. I will be a little 

bit more precise. What role did employees, current or former, who 

were actually impacted by these adverse experiences at the FDIC 

play in contributing to the recommendations? 

Mr. KIM. Thank you for that clarification. Of course, the entirety 

of our report is based on facts that we learned from speaking with 

people at the FDIC, current and former, as well as the documents. 

We came in with no personal knowledge of what was going on at 

the FDIC, which is why we started our remarks today by emphasizing the emotion that we heard from people who were reporting. 

The entirety of the findings and the recommendations are based on 

what we learned from the FDIC. 

In terms of the recommendations, there were many people within 

the FDIC, particularly those who are part of employee resource 

groups, who had very good ideas about what to do, and we understood that they had contributed in part to the development of the 

action plan. In our interviews with them, we also asked those who 

had experienced these issues, those who were part of the process, 

how do you think this could be improved, and a lot of that was reflected in our recommendations as well. 

Ms. PRESSLEY. Okay. I have some other questions I need to get 

to, but that is so critically important. It is essential to healing for 

those who were adversely impacted. And I am just a firm believer 

that those closest to the pain should be closest to the power driving 

and informing the policymaking, and that is certainly true for survivors’ justice. So, I hope that they will continue to be actively engaged and their input solicited. It is so important that you are 

partnering with them because they are experts in addressing sexual harassment and protecting workers’ rights. 

Mr. Kim, in the report, it states that the FDIC did not concur 

with two of OIG’s recommendations on proportionate and consistent disciplinary action for substantiated harassment. What 

were the two recommendations, and why did the FDIC oppose 

them? 

Mr. KIM. We understand that after the Office of the Inspector 

General (OIG) report in 2020, the FDIC took issue with—— 

Ms. PRESSLEY. I’m sorry. I am running out of time, so could you 

just tell me what were the two recommendations? 

Mr. KIM. We don’t know exactly on what basis the FDIC resisted 

those. 

Ms. PRESLEY. Okay. Well, no one, and I repeat, no one, should 

ever be subjected to sexual harassment in the workplace. This is 

an issue that affects people of all walks of life in workplaces 

throughout America, and that is why we will be introducing the BE 

HEARD in the Workplace Act. This is anti-harassment, survivorfocused legislation that will codify critical changes to prevent workplace harassment and discrimination and enable workers to seek 
42 

accountability and justice. It was drafted in close partnership with 

survivors, civil rights lawyers, and workers’ rights advocates. 

This bill prohibits mandatory arbitration and nondisclosure 

agreements from covering up harassment. It expands the jurisdiction of the Equal Employment Opportunity Commission (EEOC), 

and it outlines a clear legal pathway for survivors to seek legal redress through the court system. The BE HEARD in the Workplace 

Act is essential to protecting workers and ensuring accountability 

for discrimination, harassment, and abuse. I want every worker to 

know, we don’t just care about your labor, we give a damn about 

your lives, and every worker should be able to do their job with 

safety, dignity, and respect. Thank you. 

Mr. FLOOD. The gentlewoman yields back. The gentleman from 

Tennessee, Mr. Rose, is now recognized for 5 minutes. 

Mr. ROSE. I want to thank Chairman McHenry and Ranking 

Member Waters for holding this hearing, and thank our witnesses 

for being with us today. 

Director Hsu, as the founder and operator of a business, I know 

just how important values are as a guiding beacon to employees. 

At the Federal Deposit Insurance Corporation, you have the stated 

values of integrity, competence, teamwork, effectiveness, accountability, and fairness. I am sure your nod indicates you are aware 

of that. 

Director Hsu, the FDIC describes the value of integrity as adhering to the highest ethical and professional standards. Based on the 

FDIC definition of, ‘‘integrity,’’ does Chair Gruenberg yelling at his 

staff meet the standard of integrity? Yes or no? 

Mr. HSU. Any misconduct does not meet that standard. 

Mr. ROSE. I think you are right, and, Director Hsu, the FDIC describes the value of teamwork as communicating and collaborating 

effectively with one another. Based on the FDIC definition of, 

‘‘teamwork,’’ does Chair Gruenberg’s staff being afraid to give him 

bad news sound like he meets the value of teamwork? Yes or no? 

Mr. HSU. Fear is not a part of teamwork. 

Mr. ROSE. And, Director Hsu, the FDIC describes the value of 

fairness as respecting individual viewpoints and treating others 

with dignity and trust. Based on the FDIC definition of, ‘‘fairness,’’ 

does your staff not having trust in the Chair to write to him with 

concerns like they did with Chair Bair or Chair McWilliams indicate that he meets the value? Yes or no? 

Mr. HSU. Trust is critical. We need to work extremely hard to rebuild trust with the staff at the FDIC. 

Mr. ROSE. Let’s be honest, Director Hsu. Chair Gruenberg does 

not embody the values of the FDIC. Employees are working in fear 

at the agency as we speak. I grew up on a farm, and early in my 

life I learned from my grandmother that when the fox is in the hen 

house, you have to get it out. You don’t leave it there for months 

and months and expect not to suffer continual damage. And so 

while I can appreciate Chair Gruenberg’s decision to resign, frankly, it needs to happen now, and having it happen months from now 

puts the country and certainly the institution of the FDIC at risk. 

Director McKernan, as you consider the values of integrity, competence, teamwork, effectiveness, accountability, and fairness that 

are supposed to guide the Federal Deposit Insurance Corporation, 
43 

did your review of the Cleary Gottlieb report and personal experience at the FDIC find a culture reflective of those values? 

Mr. MCKERNAN. No. You can’t read the report and think that our 

culture is consistent with the values. 

Mr. ROSE. And Mr. Kim, the report outlines that employees do 

not have trust in the reporting process, even though the FDIC has 

over five offices for employees to make or to take their reports. 

What were you hearing from employees that drew Cleary to that 

conclusion? 

Mr. KIM. We were hearing both that there was confusion in the 

reporting processes, that there were a number of different places 

that they could report, but there was not a uniform understanding 

of which reporting channel was for what, and then, there was concern expressed to us that some of the reviews following reports 

were conducted by groups that had management’s interests more 

in mind than the complainants, and raised credibility questions 

about those reviews. 

Mr. ROSE. I can’t help but hear what I have heard from each of 

you today and not reflect back to January 20, 2021, when President 

Biden said that everyone is entitled to be treated with decency and 

dignity, and I agree with the President. That is true. He went on 

to say that if you treat another colleague with disrespect, talk 

down to someone, I promise I will fire you on the spot. On the spot, 

no ifs, ands, or buts. It sounds to me like that admonition is not 

being taken to heart with respect to Chair Gruenberg. And I would 

suggest that Chair Gruenberg should reflect on that, and I hope 

the Administration will reflect on that very clear admonition. And 

I trust that my colleagues on the other side understand the clarity, 

at least in the words of President Biden, and I think it is time for 

that clarity to be implemented. With that, Mr. Chairman, I yield 

back. 

Mr. FLOOD. The gentleman from Tennessee yields back. The gentlewoman from Michigan, Ms. Tlaib, is now recognized for 5 minutes. 

Ms. TLAIB. Thank you, Mr. Chairman. The question is, how can 

you address a problem that you can’t see? One longstanding issue, 

and I feel like maybe some of my colleagues have brought it up as 

documented in both the 2020 Inspector General’s report and the 

Cleary report, was the lack of a centralized database tracking and 

documenting harassment claims, and the investigations at the 

FDIC. And before, I think 2020, the internal records were maintained in a hard-copy file system held by specific individuals there 

and stored electronically in FDIC’s, what they call the Corporate 

Human Resources Information System (CHRIS). And from 2008 to 

2021, the CHRIS system documented only 2 cases of sexual harassment, and just 7 cases of harassment. 

Mr. Kim, and Ms. Mainoo, given that the 2009 Office of the Inspector General survey found that 8 percent of FDIC respondents 

had experienced sexual harassment from 2015 to 2019, is there any 

reason to believe that CHRIS database records from 2008 to 2021 

were complete or accurate? 

Ms. MAINOO. There is no reason to believe that the CHRIS database was complete. 
44 

Ms. TLAIB. Okay. In terms of tracking workplace misconduct, 

how would you characterize the FDIC’s data collection and management practices, for both of you? 

Ms. MAINOO. Currently? 

Ms. TLAIB. Yes. 

Ms. MAINOO. We understand that the group within the Human 

Resources Division at the FDIC, within the Division of Administration, has taken steps recently to improve centralized and systematic recordkeeping. In the past year, we understand—— 

Ms. TLAIB. Is this based on their action plan? 

Ms. MAINOO. No, this actually predates the action plan. 

Ms. TLAIB. Okay. 

Ms. MAINOO. We understand that in the past year, that group 

specifically has introduced a system that now tracks different types 

of interpersonal misconduct so that it allows the FDIC to identify 

sexual harassment, for example, compared to hostile work environment, and also identifies whether misconduct falls under the 

FDIC’s anti-harassment program, which the records before did not 

do. 

Ms. TLAIB. And I am not rolling my eyes at you. It is just really 

bizarre that they would do so. So, in the FDIC’s December 2023 action plan, one of the stated goals was to, ‘‘enhance the centralized 

tracking system for monitoring sexual harassment claims.’’ The 

projected completion of this was February 29th of this year. 

So, either Mr. McKernan or Mr. Hsu, has this action item been 

successfully completed? If so, what specific steps were taken to improve the FDIC’s ability to track misconduct? 

Mr. MCKERNAN. I am not aware of whether it is actually completed, and even if we are saying it is completed, I won’t believe 

it until I see some independent validation that it is completed. 

Mr. HSU. I agree with Director McKernan. The completion of the 

action plan for that particular database is only going to work if 

people feel safe. 

Ms. TLAIB. I see. There is no trust. 

Mr. HSU. That is the fundamental thing that needs to be addressed. 

Ms. TLAIB. It makes sense. Yes, I actually talked to him about 

that. People have lost a lot of trust. Staying on the topic of collecting and tracking information, the 2021 Office of the Inspector 

General report found that the FDIC does not have a systematic 

process for collecting or analyzing employee retention data, for instance. According to the Cleary report, the FDIC revised its retention tracking process in 2023. So, either Mr. Hsu or Mr. McKernan, 

what is the FDIC’s current process for tracking employee retention 

records? Do either of you know? 

Mr. HSU. My understanding is that there are projects to improve 

these. Again, I think as Board members, our focus is we really need 

to change both structure and culture. 

Ms. TLAIB. No, Mr. Hsu, because I know when people start leaving, something is wrong. So, I am trying to figure out what percentage of employees who leave the FDIC complete exit surveys, what 

are we doing there, because that can always help with indicating 

whether or not there is a pattern of sexual harassment, there is 

something wrong, getting to the root cause of turnover, whatever 
45 

you want to call it. Again, we are talking about retention and the 

importance of exit interviews.. 

Mr. HSU. Yes. I believe that has been identified in the report as 

something that needs to be improved as part of the action plan, in 

concert with these other steps. They all have to move together. 

Ms. TLAIB. But are they doing exit interviews right now? 

Mr. HSU. I will have to get back to you on that. 

Ms. TLAIB. You don’t do exit interviews right now? 

Mr. HSU. I don’t want to misspeak. 

Ms. TLAIB. Okay. 

Mr. HSU. I want to make sure we get back to you on this point. 

Ms. TLAIB. That is really important, especially in such a large organization right now. 

Thank you, Mr. Chairman. I yield back. 

Mr. FLOOD. The gentlewoman yields back. I now recognize myself 

for 5 minutes. Thank you to all of our witnesses for being here 

today. 

The independent report from Cleary Gottlieb on the FDIC’s 

workplace culture and the conduct of Chairman Martin Gruenberg 

is disturbing. The report makes a number of recommendations for 

the future of the FDIC. Let’s review some of those. 

Number one calls for access to the Chair. This recommendation 

would ensure that the mental health resources developed as a result of the recommendations would have an audience with the 

Chair and other executives in order to make those cultural 

changes. Chairman Gruenberg is not just a symptom of the culture; 

he has become so ingrained in the culture that it is indistinguishable from his personal leadership. You can’t shake up the order of 

things when you are the ultimate symbol of the old regime. 

The number two recommendation calls for a 360-degree review of 

all leadership to ensure accountability. Let’s take a look at Chairman Gruenberg’s history to get a sense of how he might receive the 

constructive feedback resulting from this review. In the report, one 

executive stated that Mr. Gruenberg’s actions have the effect of 

chilling open conversations. Another said that there was, ‘‘a great 

reluctance to deliver bad news to Marty Gruenberg.’’ 

In November 2020, when overseeing a bank acquisition, the officers of the acquiring bank did not wear masks to a meeting because the State where the meeting took place did not have a mask 

mandate at the time. Chairman Gruenberg, ‘‘lost it,’’ when he 

heard the bankers did not wear masks and he took his rage out on 

his own staff. It got so bad that one employee who was the target 

of this behavior said, ‘‘I might cry. I want to quit.’’ 

Finally, when confronted with the fallout from The Wall Street 

Journal story about Mr. Gruenberg’s unacceptable conduct, the 

Chairman refused to believe the story’s descriptions of his own behavior, prompting one executive to leave the room in outrage. 

Given this pattern of behavior, can we really expect Chairman 

Gruenberg to faithfully implement these cultural changes, particularly ones that would require his personal buy-in as Chairman? 

Some of my colleagues have already brought up an issue I would 

like to focus more on: the prospects of a quick Senate confirmation 

process. We all know the Senate does not like to move quickly, and 

I would expect nothing different in this case. Chairman Gruenberg 
46 

has vowed to remain at his post and has told employees to prepare 

for him to stay through the end of the year. We are talking about 

someone who has served as an Acting Chairman 3 times over the 

course of his career. A large chunk of his career has been spent 

with interim titles. Chairman Gruenberg is still the FDIC because 

of his refusal to leave at the end of his last chairmanship. 

Director Hsu, do you feel that Chairman Gruenberg is the correct 

person to implement the changes recommended in this report in 

the long term? 

Mr. HSU. Thank you for the question. I am focused on what I can 

control. What I can control are the actions of the Board that works 

to protect the employees of the FDIC. 

Mr. FLOOD. But I am asking you for your opinion. Do you think 

that he is the correct person to do this? 

Mr. HSU. Again, I am focused on what I can control. So, I am 

really focused on trying to get in place the cultural and structural 

transformation. 

Mr. FLOOD. Director Hsu, you are not responding to my question. 

Let’s go to my next question. Are you comfortable with Chairman 

Gruenberg staying in his post on an interim basis? 

Mr. HSU. Again, I am focused on these actions. These actions 

have to get done. 

Mr. FLOOD. Are you comfortable? 

Mr. HSU. As long as he is focused on delivering and he delivers 

on the commitments to take actions. That is what is really, really 

critical. I will work with whomever the Chair is, but that is really 

important, to focus on those actions. 

Mr. FLOOD. Director Hsu, as we both know, the Senate confirmation process could take a long time. All the while, FDIC employees 

are being asked to wait for leadership required to make this cultural transformation. How long do you think they should have to 

wait? 

Mr. HSU. They are not going to wait. We are going to take action 

immediately. We are taking action on the critical parts. 

Mr. FLOOD. So, you are confident that Mr. Gruenberg can do 

this? You said, they don’t have to wait, but he is still there. 

Mr. HSU. We are taking action. 

Mr. FLOOD. Okay. 

Mr. HSU. We are taking action to—— 

Mr. FLOOD. Does that mean you are comfortable with him doing 

this job? 

Mr. HSU. I can control what I can control. We are taking action 

on the expert, on the monitor, on standing up a new structure so 

that people don’t have fear of retaliation. Those are the things on 

which I am focused. 

Mr. FLOOD. There are thousands of employees at the FDIC who 

are banking on this changing, and we have the same person at the 

top, who has not demonstrated a willingness to tackle this problem. 

In fact, people are afraid to go to him and even talk about it. So, 

I express the lack of confidence that I have as a member of this 

committee in seeing things change. With that, thank you. I yield 

back. 
47 

The gentleman from Wisconsin, Mr. Steil, who is also the Chair 

of the House Administration Committee, is now recognized for 5 

minutes. 

Mr. STEIL. Thank you very much, Mr. Chairman. Mr. Hsu, after 

The Wall Street Journal published its report in November, Chairman Gruenberg announced he had already hired BakerHostetler to 

conduct a third-party review. Then, a week later, the FDIC Board 

of Directors established a Special Review Committee to oversee a 

third-party review. Why did the Board believe it was necessary to 

create a special committee and hire an outside law firm to conduct 

the review? 

Mr. HSU. The Board unanimously voted to create the Special Review Committee to ensure that there is independence and credibility with regard to that review. 

Mr. STEIL. And would there be a concern that there would be a 

lack of credibility or independence if that committee would have 

been selected by Mr. Gruenberg? 

Mr. HSU. I think that is implied within that resolution, yes. 

Mr. STEIL. Okay. Let me jump to you, Mr. McKernan, if I can. 

From my understanding, BakerHostetler was already investigating 

the FDIC when Cleary Gottlieb was chosen, as just discussed. 

Whose decision was it to scrap BakerHostetler’s investigation? 

Mr. MCKERNAN. The Special Review Committee made the decision to go with Cleary instead of BakerHostetler. 

Mr. STEIL. So, is the Special Review Committee not the full FDIC 

Board? 

Mr. MCKERNAN. That is right, just me and Director Hsu. 

Mr. STEIL. And could you also comment again, and see if you 

agree here with Mr. Hsu, as to why Cleary Gottlieb was chosen instead of BakerHostetler? 

Mr. MCKERNAN. The way I looked at it is, we had to have an 

independent review, not a Chairman-driven or staff-driven review. 

You can’t investigate yourself. You have to have someone from the 

outside. The best we have are independent Directors. Also, when 

you looked at the terms of the BakerHostetler engagement, it 

raised real questions around the independence. It was very narrow 

in scope. It was very limited in budget. That was part of the reason 

we made a strong case for a separate committee of the Board to 

lead the investigation. 

Mr. STEIL. Thank you very much. Back to you, Mr. Hsu, if I can. 

There is a long history of incidents involving Chairman 

Gruenberg’s temper at the FDIC predating, obviously, The Wall 

Street Journal reporting. Were you aware of the internal FDIC investigation in 2008 into Mr. Gruenberg’s behavior before The Wall 

Street Journal articles appeared? 

Mr. HSU. No. 

Mr. STEIL. You were not formally aware? You had no knowledge 

that any review had been conducted? 

Mr. HSU. No, was not aware of it either formally or informally—— 

Mr. STEIL. So, there wasn’t any casual conversation at the workplace around the water cooler that this review might be ongoing? 

Mr. HSU. I was not aware, no. 
48 

Mr. STEIL. You were not aware. Director McKernan, if I can come 

back to you, were you aware? 

Mr. MCKERNAN. Just to make sure I understand the question, 

was I aware of the 2008 investigation? 

Mr. STEIL. Prior to The Wall Street Journal article. 

Mr. MCKERNAN. Yes, I had heard rumors about it. 

Mr. STEIL. So, you had heard rumors, and you have full evidence. 

Walk me through what that looked like to you? 

Mr. MCKERNAN. How did I know, and what did I know then? 

Mr. STEIL. It was just a casual conversation amongst employees 

of the FDIC that this review by a supposed, well, we can have the 

discussion as to the independence of the law firm, but a law firm 

review of the behavior of the Chairman. Was that just water cooler 

talk around the FDIC? 

Mr. MCKERNAN. There are a lot of open secrets, as you know, in 

D.C., and this was one of those, that there had been an issue in 

2008 and also an investigation. 

Mr. STEIL. And you would say it was widely known at the FDIC? 

Mr. MCKERNAN. At the FDIC, I can’t speak to that. I don’t know. 

Mr. STEIL. Where was it widely known, or where would you have 

thought that this would have been a casual conversation two individuals might have had? 

Mr. MCKERNAN. I was a Senate staffer at the time, and I think 

folks knew then. 

Mr. STEIL. So, Senate staffers who were involved in the broader—probably, the Senate Banking Committee then would have had 

general knowledge that—— 

Mr. MCKERNAN. I was speaking to the fact of the investigation—— 

Mr. STEIL. ——an investigation was ongoing? 

Mr. MCKERNAN. Oh, no, no. I’m sorry. That there had been an 

investigation. 

Mr. STEIL. That there had been an investigation. 

Mr. MCKERNAN. Yes. 

Mr. STEIL. But not that BakerHostetler was conducting a review? 

Mr. MCKERNAN. Oh, I’m sorry. No, the BakerHostetler thing 

came out of The Wall Street Journal reporting. 

Mr. STEIL. Great. It is good that we are diving into this. So, you 

did not have knowledge that the BakerHostetler review was ongoing until you read about it in The Wall Street Journal? 

Mr. MCKERNAN. That is right. I don’t remember where I learned 

about the BakerHostetler—I think it was actually at the hearings 

immediately after The Wall Street Journal reporting. 

Mr. STEIL. But after The Wall Street Journal reporting. It was 

not part of a casual conversation you had with people? 

Mr. MCKERNAN. Right. 

Mr. STEIL. You had heard the casual conversations that there 

were problems at the FDIC. That was, I think, reasonably wellknown, and it has now been fully exposed to the level that it was. 

Mr. MCKERNAN. That is right. 

Mr. STEIL. But the BakerHostetler review you were unaware of? 

Mr. MCKERNAN. It was not brought to the Board’s attention—— 

Mr. STEIL. Say it again? 
49 

Mr. MCKERNAN. ——which is a problem because the Board is 

supposed to act on major matters. Instead, the Chairman retained 

a firm to do an investigation, which would have attracted a lot of 

publicity without alerting the Board. 

Mr. STEIL. Thank you. In my limited time, I just think it is so 

important here that Chairman Gruenberg should resign. He should 

have never been involved in the initial review with a third party 

for the exact reasons that you identified for us here today. And as 

noted by Mr. Rose, re-quoting President Biden, he is saying he has 

no ifs, ands, or buts about whether or not someone engaged in this 

action should be terminated. He should be terminated. He engaged 

in the action. And to me, it is pretty clear as to what is going on. 

The Administration is concerned about the policies, and they are 

willing to put their agenda ahead of protecting people. 

Mr. Chairman, I yield back. 

Mr. FLOOD. The gentleman from Wisconsin yields back. The gentleman from Pennsylvania, Mr. Meuser, is now recognized for 5 

minutes. 

Mr. MEUSER. Thank you, Mr. Chairman. Mr. Hsu, who has been 

fired or put on leave at the FDIC or separated from employees that 

they allegedly have been abusing and harassing? 

Mr. HSU. My understanding is that there have been four individuals who have been separated from the agency. 

Mr. MEUSER. Okay. And you support that? 

Mr. HSU. I have some indirect knowledge of that. I was not directly involved with those things. 

Mr. MEUSER. And what they did apparently was more serious 

than any accountability of Mr. Gruenberg, in your view? 

Mr. HSU. I don’t think I am at liberty to talk about the specifics 

around that, but my understanding is that there have been four 

separations based on—— 

Mr. MEUSER. Why not? You are under testimony. Why not? 

Mr. HSU. I think there are protections around privacy and personal—— 

Mr. MEUSER. You are doing a lot of protecting, Mr. Hsu, a lot of 

protecting. 

Mr. HSU. My point is not—— 

Mr. MEUSER. It is not loyalty. It is destructive to the FDIC. You 

are missing the picture. In my view, sir, you are missing the picture. You told Representative Meeks that you feel Mr. Gruenberg 

can restore trust and credibility at the FDIC. You said, yes, you do. 

So, you condone how he has handled things at the FDIC and you 

think he is the right person, the only person who can correct the 

situation that was created under his leadership. Does that make 

any sense to you? 

Mr. HSU. I understand the question. I don’t condone any actions 

that are inappropriate. My focus is on the actions that are going 

to restore trust with the employees of the FDIC. That is where my 

focus is. 

Mr. MEUSER. Okay. You keep saying, ‘‘action.’’ What about his inaction? What about the inaction of many of the supervisors who 

were there? They should all be under scrutiny and carefully reviewed. It sounds like a madhouse took place here. 
50 

Mr. HSU. Currently, there are three critical actions that are 

being supported and considered by the Board: the hiring of the expert; the hiring of the monitor; and standing up a new structure 

so that there is no fear of retaliation. Those are all being done by 

the full Board engagement. 

Mr. MEUSER. Oh, it sounds like one heck of a bureaucratic committee reviewing this, which will apparently take months, meanwhile leaving Mr. Gruenberg there and leaving employees in a 

state of malfunction and dysfunction and disarray. When did you 

first learn of this chaos taking place? 

Mr. HSU. I read it in The Wall Street Journal article—— 

Mr. MEUSER. Was that the first time you heard of it? 

Mr. HSU. Yes. It was very disturbing. 

Mr. MEUSER. Were you surprised? 

Mr. HSU. I was very bothered by it, yes. 

Mr. MEUSER. Okay. Mr. McKernan, you said you heard rumors 

years back? 

Mr. MCKERNAN. To be specific here, I heard, I think, maybe in 

August or September, that the Journal was looking into workplace 

culture issues. 

Mr. MEUSER. Were you surprised to hear it? 

Mr. MCKERNAN. About the workplace culture issues? 

Mr. MEUSER. Yes. 

Mr. MCKERNAN. I didn’t hear much about in August or September around what the Journal was going to report, so I was 

deeply shocked when I actually saw the stories in November. 

Mr. MEUSER. Okay. So, everybody was shocked. Everybody was 

surprised. Just heard about it, read about it in the paper. How 

much involvement do you have on a monthly basis with the FDIC? 

Mr. HSU. I am a Director, so we have monthly Board meetings, 

and then there are meetings in between to deal with Board matters. 

Mr. MEUSER. Human resources is never in those meetings? 

Mr. HSU. Generally not. 

Mr. MEUSER. You don’t pay any attention to it, with 6,000 employees? There’s no reason for the Board to pay attention to the 

issues of 6,000 employees? 

Mr. HSU. The Board is ultimately responsible for the agency, and 

so we need to take care of the employees. 

Mr. MEUSER. Let me ask you this. You have four divisions within 

your agency that you oversee. If this was occurring within their division, how would you handle that with that division Director? 

Mr. HSU. Misconduct—— 

Mr. MEUSER. The same way? Would you leave him there? Would 

you say, hey, you know what? I know there has been a mess for 

years. Women have been harassed, men have been harassed, all 

kinds of abuses taking place, lawsuits, right? You name it. It is 

bad, but I am going to keep you there because I want you now to 

fix the mess that you made. 

Mr. HSU. No. 

Mr. MEUSER. Well, that is what you are doing with Mr. 

Gruenberg. 

Mr. HSU. Wrongdoers must be held accountable. They will be 

held accountable—— 
51 

Mr. MEUSER. How is it any different than what is happening 

with Mr. Gruenberg? 

Mr. HSU. Mr. Gruenberg was not cited as a root cause of the 

problems at the FDIC in the report. He is not cited as a root cause. 

There are recommendations which will lay out the actions that 

need to be—— 

Mr. MEUSER. Oh, so it needs to be a root cause. You are a Division Director, so you would find out if he was part of the root 

cause? 

Mr. McKernan, do you agree with that? Do you think that is a 

good management policy? 

Mr. MCKERNAN. No. As I said, I think we really need a fresh 

start, and the sooner, the better. 

Mr. MEUSER. The sooner, the better. So, why not today? I yield 

back, Mr. Chairman. 

Mr. FLOOD. The gentleman from Pennsylvania yields back. The 

gentleman from Wisconsin, Mr. Fitzgerald, is now recognized for 5 

minutes. 

Mr. FITZGERALD. Thank you, Mr. Chairman. I apologize. We have 

a Judiciary Committee hearing going on at the same time. 

We are all appalled at the findings of the report and the toxic 

culture at the FDIC. Last year, Discover’s CEO, Roger Hochschild, 

quickly resigned after regulatory issues surfaced. Similarly, in 

March, New York Community Bank’s CEO stepped down following 

the bank’s near-collapse. In neither case did the CEO wait around 

until a permanent successor was in place. 

Mr. McKernan, do you agree that a responsible regulator would 

not be doing its job if it let a bank CEO stick around for similar 

conduct to what was reported in the Cleary Gottlieb investigation? 

Mr. MCKERNAN. I guess hypotheticals are always dangerous, but 

it is hard to imagine the bank regulator would let management 

stick around. 

Mr. FITZGERALD. Yes. Thank you. 

Comptroller Hsu, the same question to you. Would a responsible 

regulator allow a CEO to stick around until a permanent replacement is found, despite the misconduct that has happened under 

their watch, yes or no? 

Mr. HSU. A responsible regulator will take the steps necessary 

to ensure the safety and soundness of the institution. 

Mr. FITZGERALD. Mr. Kim, and Ms. Mainoo, I would like to discuss your recommendation of the 360-degree review of a Chair or 

a Chair’s direct reports. Can you briefly describe this 360-degree 

review, Mr. Kim? 

Mr. KIM. Yes. We believe that it would be important for the leadership to have the 360-degree review, to be informed of the views 

and perspective, both of people to whom they report but also to 

those who report to them. 

Mr. FITZGERALD. Ms. Mainoo, can you answer the same question? 

Ms. MAINOO. Yes, and just to add to what Mr. Kim said, we also 

learned when we spoke with FDIC employees, as well as by reviewing records of recommendations that employee resource groups 

have made in the past, that there is interest by FDIC employees 

in 360-degree reviews. And so, we included that as one of our recommendations. 
52 

Mr. FITZGERALD. And your recommendation states that the 360- 

degree review should occur for at least the first 2 years by an independent third party. Is that correct? 

Ms. MAINOO. That is correct. 

Mr. FITZGERALD. Do you think this should be the same third 

party that will be working with the transformation monitor on the 

culture change, or do you see this as being a completely separate 

third party from the culture change role? 

Ms. MAINOO. As we say in the report, the independent third 

party may or may not be the same—— 

Mr. FITZGERALD. Okay. The Cleary report highlighted the misconduct of Chairman Gruenberg in the report’s section on findings. 

Do you think that your team would have still offered this recommendation if you had not found misconduct perpetuated by the 

Chairman? Mr. Kim, can you answer that? 

Mr. KIM. I believe we saw value in the 360-degree reviews regardless of who is the Chairman, and would have recommended a 

similar review. 

Mr. FITZGERALD. And because the report highlighted the misconduct of the current Chairman of the FDIC, do you think the information obtained by the 360-degree review should be submitted 

to Congress to assist on our oversight efforts of a culture change? 

Mr. KIM. Our view was that it should be conducted by an independent party so that they are not worried about concerns or fear 

that management would hear about it. I don’t think we recommended that it be made public or provided to Congress. I do 

think there are some questions about how open someone will be in 

their 360-degree reviews if they know it is going to be provided 

publicly, so that is not part of our recommendation that it be provided to Congress. 

Mr. FITZGERALD. Thank you. Mr. Chairman, I yield back. 

Mr. FLOOD. The gentleman yields back. The gentlewoman from 

California, Mrs. Kim, is now recognized for 5 minutes. 

Mrs. KIM. Thank you. Mr. Hsu, and witnesses, thank you for 

being here with us. 

Mr. Hsu, in a joint statement that is issued by you and Director 

McKernan to announce the release of the Cleary Gottlieb report, 

you say the report, ‘‘put the people of the FDIC first and focused 

on identifying root causes.’’ You also noted that it was a balanced, 

focused, and nonpartisan report. Do you still stand by this statement and sentiment that the Cleary report put the people of the 

FDIC first? 

Mr. HSU. Yes. 

Mrs. KIM. You do. Mr. Hsu, then, do you agree with the Cleary 

report’s assessment that Chairman Gruenberg’s attributes hinder 

his ability to establish trust and confidence in leading a meaningful 

culture change at the FDIC, because based on your statement regarding that report, you must agree that it is time for new leadership in order to put the people of the FDIC first. 

Mr. HSU. I agree with the report’s conclusions that his actions 

present unique challenges to building trust with the staff, and that 

is why I am very focused on actions that the agency—— 

Mrs. KIM. Do you still support Chairman Gruenberg? 
53 

Mr. HSU. I am focused on what I can control. What I can control 

is influencing the Board to take the actions that are necessary to 

reestablish trust with the staff. That is my focus. 

Mrs. KIM. Okay. One of the recommendations of the report was 

for victims of abuse and harassment to have access to the Chairman of the FDIC, but as it stands today, unfortunately, it seems 

to be counterintuitive for those victims. Former Chairman 

McWilliams, for example, spent a lot of time with the staff in the 

cafeteria and rode the bus from Virginia Square to the other offices, whereas Chairman Gruenberg spends his time with only his 

small circle of trusted advisors. 

So let me ask you a question, Mr. Kim. Based upon your investigation, do FDIC staff believe that Chairman Gruenberg is an accessible Chairman? 

Mr. KIM. I don’t think we put that question in that way, whether 

he is accessible. What we learned, we put in the report, which is 

that although many employees had positive relationships with him, 

there were a certain number, including certain direct reports, who 

had had difficult interactions with him. And then, there was a general—— 

Mrs. KIM. I think the point of my question is, a Chairman 

shouldn’t just surround himself with the top executive senior members only, but should be accessible to all employees regardless of 

their status or rank. That is the accessibility question that I am 

asking you. 

Mr. KIM. Accessibility is obviously a good thing, and being more 

accessible, obviously, helps improve workplace culture. 

Mrs. KIM. Let me ask the question to Mr. McKernan. If Chairman Gruenberg does open his door to victims of harassment, do 

you think that the findings made about his behavior towards staff 

would make employees hesitant to approach the Chairman directly? 

Mr. MCKERNAN. Given his reputation as documented in the 

Cleary report, I suspect that would be challenging for some. 

Mrs. KIM. So, can you answer the same question? Why do you 

think it is important that the Chairman is accessible to his employees regardless of their status, rank, or position? 

Mr. MCKERNAN. One of the things I certainly learned overseeing 

the investigation is you cannot, as a leader, rely simply on the formal reporting channels. They break down. You have to have a real, 

deep-seated interest in trying to root out information, to get your 

sense of the pulse through other informal mechanisms, and that requires an open rapport with the staff. 

Mrs. KIM. To be clear, this is a great recommendation. The FDIC 

has a pervasive toxic culture, and because of that, employees 

should have a direct line to the Chairman to report those issues. 

However, with Chairman Gruenberg at the helm, I am not sure if 

the employees would benefit from direct access to him or would 

even want to have that available to them, for that matter. In the 

report, Cleary recommended that the FDIC hire an independent 

third party to advise and assist with the implementation of the recommendations, but I am concerned that the leader of the office 

may feel a sense of loyalty to Chairman Gruenberg. 
54 

Director McKernan, would it have been valuable for the Special 

Review Committee or other Board members to be involved in the 

decision-making process for setting up the office? 

Mr. MCKERNAN. Yes. This is actually a topic of some debate now. 

This monitor is a critical choice for us. I learned about the process 

when the Chairman announced it at the hearing—— 

Mr. FLOOD. The gentlewoman’s time has expired. 

Mrs. KIM. Thank you. 

Mr. FLOOD. The gentleman from New York, Mr. Lawler, is now 

recognized for 5 minutes. 

Mr. LAWLER. Thank you, Mr. Chairman. Democrats say Chairman Gruenberg was not aware of the deep-seated cultural issues 

at the FDIC until it was revealed by public reporting. When Chairman McWilliams took over at the FDIC, she immediately saw the 

cultural issues that were prevalent at the agency. Chairman 

McWilliams came to the FDIC with a goal to know the issues faced 

by employees and took the time to ride the shuttle to the Arlington 

and D.C. campuses, to eat lunch in the cafeteria, and had an opendoor policy to hear employees’ concerns. Through her outreach to 

employees, Chairman McWilliams noted that the toxic culture at 

the FDIC was readily apparent, and she began initiatives to improve the agency. 

Within the first 3 months of her tenure, Chairman McWilliams 

received a letter from anonymous African-American employees outlining a series of discriminatory acts at the FDIC. Chairman 

McWilliams worked with the employee resource groups and her 

staff to form employee-driven initiatives to fix the issues highlighted in the letter. So, when I look at this situation, some of my 

colleagues seem to believe that the report did a disservice to the 

FDIC because it focused only on the bad stories about Chairman 

Gruenberg, and they believe the report downplayed the same concerns under prior Chairs. 

Mr. Kim, and Ms. Mainoo, as part of your investigation, did you 

review workplace culture under prior Chairs of the FDIC other 

than Chair Gruenberg? 

Mr. KIM. As we set forth in our report, we received reports from 

people who had suffered experiences that went back many years, 

so it did include information and reports during times that covered 

prior Chairs as well. 

Mr. LAWLER. And did you hear from any employees about any 

differences between the leadership of prior Chairs and Chairman 

Gruenberg’s leadership? 

Mr. KIM. Our focus was on the reports of incidents that they experienced and their experiences with respect to the workplace culture. As we note in the report, their experiences with respect to 

workplace culture we found were longstanding and deeply ingrained, I believe is the word that we used, so that led us to a 

number of the recommendations as well as the findings. But we 

found in terms of the workplace culture issues, that it was something that was longstanding and not attributed to a particular 

Chair. 

Mr. LAWLER. Okay. In your review, do you recall employees reporting encounters with Chairman Bair or Chairman McWilliams, 
55 

where the employee described those Chairs as being unprofessional, aggressive, or hostile? 

Mr. KIM. As I said, we were not focused on—— 

Mr. LAWLER. That is a yes-or-no question. Do you recall anybody 

in your review? 

Mr. KIM. We do not recall anyone using those words. 

Mr. LAWLER. Did anybody say they were disrespected, disparaged, or treated unfairly by those Chairs? Yes or no? 

Mr. KIM. Not in the context of hotline reports, but in the context 

of discussing experiences with prior Chairs, there were some who 

had noted that former Chair, Sheila Bair, could at times be difficult 

as well. 

Mr. LAWLER. Okay. Director McKernan, yes or no, should Chairman Gruenberg step down immediately? 

Mr. MCKERNAN. Congressman, I think that is a decision for our 

elected leaders, but I would say we do need a fresh start, and the 

sooner, the better. 

Mr. LAWLER. Oh, yes. 

Mr. MCKERNAN. We need a fresh start sooner, rather than later. 

Mr. LAWLER. I will take that as a, yes. Shifting gears, isn’t it 

true that when Silicon Valley Bank failed, it was not considered 

one of the large U.S. banks? In fact, it was not one of the top 10 

largest banks in the U.S. at the time. And because of its comparatively small size, you understand that many of us on Capitol Hill 

have called into question why the systemic risk exception was invoked for Silicon Valley Bank. Many businesses in the tech industry had their money on deposit at Silicon Valley Bank, correct? 

Mr. HSU. Yes. 

Mr. LAWLER. And you understand that in most instances, their 

deposit accounts held far in excess of $250,000, correct? 

Mr. HSU. That is my understanding. 

Mr. LAWLER. Those politically-connected companies would have 

lost lots of money without the systemic risk exception—— 

Mr. FLOOD. The gentleman’s time has expired. 

Mr. LAWLER. ——correct? 

Mr. FLOOD. The gentleman’s time has expired. The gentleman 

from Iowa, Mr. Nunn, is now recognized for 5 minutes. 

Mr. NUNN. Thank you, Mr. Chairman. Without objection, I would 

like to yield to my colleague from New York the time required to 

finish his question. 

Mr. LAWLER. Thank you. 

Mr. FLOOD. The gentleman is recognized. 

Mr. LAWLER. You agree those politically-connected companies 

would have lost a lot of money without the systemic risk exception, 

correct? 

Mr. HSU. The Board of the FDIC voted unanimously for the systemic risk exception. I think, as Director McKernan had noted in 

prior testimony, there was a lot going on at that time which supported that decision. 

Mr. LAWLER. Okay. When the systemic risk exception was invoked, it was announced that everyone’s money would be safe and 

insured, correct? 

Mr. HSU. The Board decided unanimously to invoke the systemic 

risk exception. 
56 

Mr. LAWLER. Okay. And you are aware that the depositor base 

for Silicon Valley Bank included people from outside America, including significant Chinese interests, correct? 

Mr. HSU. The purpose of invoking the systemic risk exception is 

to ensure that the financial stability of the United States is protected, and the Board voted unanimously to do that. 

Mr. LAWLER. Did companies with significant Chinese interests 

benefit from this decision? 

Mr. HSU. Again, the decision to invoke the systemic risk exception focuses on protecting the financial stability of the United 

States. 

Mr. LAWLER. Lastly, are you aware of any policies or directives 

within the FDIC regarding the treatment of Chinese depositors at 

Silicon Valley Bank? 

Mr. HSU. I am not aware of that. I would have to get back to 

you on that. 

Mr. LAWLER. Okay. Thank you. 

Mr. LAWLER. And thank you to my colleague, Mr. Nunn. 

Mr. FLOOD. The gentleman from Iowa is recognized for 3 minutes 

and 27 seconds. 

Mr. NUNN. Thank you, Mr. Chairman. As others have noted as 

well, I am incredibly disappointed that Chairman Gruenberg chose 

not to be with us today. Clearly, the Gottlieb report about the 

FDIC’s workplace culture is concerning. To quote the 200-page report, ‘‘the FDIC remains a good old boys club rife with sexual harassment, discrimination, and other inappropriate misconduct.’’ 

Other descriptions of the agency include a particular insular hierarchy, a risk-averse culture, and a widespread fear of retaliation 

amongst the workforce that allowed misconduct to persist, including in the last 7 years alone, 92 harassment complaints made. Zero 

resulted in any removal, reduction in grade or pay, or any discipline action more severe than a suspension, something endemic 

in Washington, D.C. 

Adding to this disturbing culture was Chairman Gruenberg’s 

claim that he had no idea what was happening at the agency, even 

though he ran it for 10 of the last 13 years when these claims were 

made. I think one of the most frustrating parts here is, how could 

anyone trust him when it was The Wall Street Journal who found 

this after just interviewing a few individuals? 

Director McKernan, I want to speak directly to you. Director 

McKernan, resignation of examiners in training who are highly 

critical to our nation’s economy doubled from 2001 until it hit a 

new high of 62 in the first 9 months of 2022. Only 48 percent of 

examiners hired in the agency remain since 2017. Do you believe 

the inability of the FDIC to retain talent affects your ability to help 

regulate my hometown banks in Iowa? 

Mr. MCKERNAN. It certainly poses some risk. 

Mr. NUNN. I would agree. How does the ability to retain quality 

staff impact our ability to police and support and help regulate our 

banks if these people have all left the job market? 

Mr. MCKERNAN. I think it is a very important, pressing question. 

If we can’t get our staff retention issues fixed, it is going to continue to mount as a challenge for our mission. 
57 

Mr. NUNN. Do you know if the FDIC has fired any employees in 

the wake of these reports? 

Mr. MCKERNAN. The Chairman has reported that there have 

been four separations. It is my understanding that three of the four 

were resignations or retirements. 

Mr. NUNN. Do you believe, Director McKernan, that the Chairman should have been the first person fired on this list? 

Mr. MCKERNAN. That is a question that is reserved for our elected leaders, but if I were asked by them my view on what is best 

for the agency, it is very clear to me that we need a fresh start 

sooner rather than later. 

Mr. NUNN. I think 92 harassment cases would say he should 

have been gone. I think the entire country is looking for dependable leadership—which has clearly failed—and they are asking for 

his resignation. He should listen to the country. 

With that, Comptroller Hsu, you have read The Wall Street Journal article entitled, ‘‘Strip Clubs, Lewd Photos, and a Boozy Hotel: 

The Toxic Atmosphere at Bank Regulator FDIC,’’ that was published a year ago. I am glad to hear that I have an extra copy here 

if you have not read it. Was this just an accepted part of the culture that you were part of? 

Mr. HSU. It is totally unacceptable. 

Mr. NUNN. I would agree with that. It is not just normal as has 

been highlighted, correct? 

Mr. HSU. Totally unacceptable. 

Mr. NUNN. Finally, one staffer was advised, ‘‘Just smile and 

make your supervisor feel good,’’ as was reported in this article. 

Mr. HSU. All of the behaviors highlighted in that article are totally unacceptable, and the root causes of that are there is a culture and there is a structure at the FDIC which needs to be transformed. 

Mr. NUNN. I concur. Twenty women quit. We have understaffed 

banking regulation. The Chairman needs to stand down to restart 

that culture. 

Mr. FLOOD. The gentleman’s time has expired. 

Mr. NUNN. Thank you, Mr. Chairman. 

Mr. FLOOD. I would like to thank all of our witnesses for their 

testimony today. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous 

materials to the Chair for inclusion in the record. 

I would ask our witnesses to please respond no later than August 

1, 2024. 

This hearing is adjourned. 

[Whereupon, at 1:47 p.m., the hearing was adjourned.] 

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