we will go as long as we can and recess for votes and return when it's concluded. we will start questioning as soon as we have a number. let's do that. i would not recognize myself

for four minutes for an opening statement. thank you for being here today. days after our last hearing he announced his intent to resign in some undetermined future date. his resignation shouldn't or should have been welcome news to the employees who have been subjected to a culture of misconduct and abuse. resigning

after the confirmation of a new chair is just more of the status quo. he 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 is a part of his failure to accept responsibility for his own actions. three weeks after the white house pledged to replace and we have yet to see a successor even nominated. there is a clear succession plan in place. so what is the delay?

we are post to believe he somehow missed this appalling behavior while beating the agency pretend the last 13 years. it is clear any cultural change will happen in spite of his presence. not because of it. the consequences of his failed leadership go further than the four walls of the fdic. the events that unfolded over the last 15 months involve him directly or the fdic under his watch. they reviewed their actions leading up to the failure and concluded staffing whether it

be shortages or communication issues was a major issue. in november they came to light up about the toxic culture in his own abusive behavior toward staff attached with bringing him bad news. it is fair to conclude the behavior directly impacted their response to last year's banking turmoil. moves slowly but make decisions and undoubtedly lash out at his own employees for presenting him information. i asked the white house and democratic colleagues does her own agenda really outweigh the need for competent leader at the helm of the fdic. with that i yield back.

>> thank you for being here today. as can many democrats have made it very clear. all fdic employees deserve a safe work environment. this has been the case under the leadership of republican and democratic chairs. i am pleased that the white house is poured the nominating its leader. to lead this effort as fdic

chair. i am concerned the report we are discussing may not tell the full story. while it focuses on the current chair i want to know why it does not examine how and why former fdic chair and her staff including the current fdic vice chair did not do more to ensure fdic workers had a safe workplace during their tenure before and after the inspector general identified a number of concerns relating to sexual harassment way back in 2020. the chair does not include critical data needed to to understand the location and misconduct over time and which types of misconduct are currently the most prevalent.

my staff provides this information, but they did not. this could significantly impact what types of reforms the fdi leadership should prioritize and where they should be implemented.

>> thankfully president biden has quickly taken steps to protect workers at the fdic by reportedly nominating the fdic commissioner to serve as fdic chair.

there's a long track record of working to protect our nation's investments. consumers and taxpayers. she successfully held accountable bank executives who engaged in financial crimes and fraud. she has been confirmed by the senate twice. i expect that they would join with democrats to support her swift senate confirmation. i yield back. >> we will continue to here our colleagues attempted to deflect blame, and we will continue to hear a litany of reasons why the chairman is the right man at the right time with the right ideas to reform the fdic. one simple fact remains.

he has failed to put politics in a radical progressive agenda overdoing what is right. he put his own ego before they fdic employees and the well- being of the agency that he reportedly loves. independent report was clear on one thing. culture starts at the top. for nearly two decades he has failed to recognize how his own misconduct negatively affects his own employees. mr. chairman, it's time for new leadership. it's time to let the agency heal. the safety and soundness of our banking system is at risk under his leadership and he should resign immediately or be removed by the president. i yield back.

>> thank you. mr. chairman, he stated he will step down from his position when a successor is confirmed. i would like to think president biden while putting forth a 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 conduct at the fdic. i do concur with the ranking member in employees and persons who worked there in all facets of work. they deserve a safe and secure work environment. i trust the chair and his successor will work to

strengthen banking regulations and capital requirements as well as rain and incentive-based compensation that encourages excessive risk-taking. and produce a safe work environment. i think you and i yield back. >> i will note for the record that while we may be frontrunning the white house we have yet to see the for nomination presented. our democratic colleagues are saying it. we will not recognize the testimony of the panel today.

>> thank you, chairman. i am testifying today in my capacity as the director on the board of the fdic and cochair of the special review committee. in these roles my objection is

to protect the people of the fdic. as in top priority in northstar throughout the entire process. employees need and deserve a safe and inclusive work place and they need it now what. a joint written statement with the director and special review committee cochair describes the process by which independent third-party review were was selected and how to review and report. at every stage of the process they sought to ensure it was independent and credible and fair. i believe we achieved that and support their findings and recommendations.

thank you and i am happy to answer any questions.>> i am a partner at of the law firm.

the three of us let the resend review we conducted on behalf of the special review committee of the board of directors. special review committee pointed our firm conduct an independent review of allegations of sexual harassment and misconduct at the fdic including hostile, abusive, unprofessional, or inappropriate conduct as well as management's response to the allegations. in the workplace culture including any practices that might discourage or deter the reporting of this type of misconduct. conducting this review we recognize the importance of the fdic. an institution that performed the critically important public

function of maintaining stability and public confidence. we appreciate it. both to the fdic and its employees as well as the public that is service. we understood that independence and credibility and fairness were a paramount importance. that is how we approached conduct of our review in the drafting of our report. to gather the facts necessary for the review and set up a hotline through which they can make reports. obtained thousands of documents and conducted additional interviews from across multiple offices and divisions. the reports made it to our hotline were particularly revealing. both in volume and substance.

over 500 individuals courageously reported. often painfully and emotionally recounting experiences of sexual harassment and discrimination and other misconduct. that they had suffered at the fdic. to we cannot describe all of the incidents reported to us we do feel compelled to convey the powerful emotion that we heard . the were reported incidents to us expressed fear and sadness and anger for what they had to endure. many had never reported their experiences to anyone before while others had reported internally and then left disappointed by their response. virtually all of them expressed hope that reported what they had gone through to us might

help change and make better the agency that they cared about deeply. conducting our review we were guided by their example and by the goal of doing right by them. we hope our report and review do justice to their experiences and honor the public service of the thousands of employees. we will discuss the findings and analysis and recommendations in our report. thank you for the opportunity to present on this important issue and we welcome questions. >> good morning. we set forth in our report the factual findings from our review and analysis of the root causes.

thank you for the opportunity to permit to this committee and we look forward to answering any questions you may have for us.

>> i will first address myself there is a report establishes made clear that what happens seems real. totally unacceptable. i hope the report puts us on a path to change and i hope real accountability is not far off. i would like to convey my respect and appreciation to the director for the exceedingly nonpartisan way to wish you approached this review. i think we set an example for how the board can and should work. i developed a strong attachment to our shared mission.

the fdic too often chooses a second path. that is not driven by policy or training period is driven by value, and it is set by our leaders. thank you and i look forward to your questions. >> thank you. i now recognize myself for five

minutes. they are responsible for overseeing the staff of the agency. do you think it's important to be chairman be able to have an open dialogue about what they do? >> absolutely. >> would you agree the findings demonstrate the fdic employees do not feel comfortable interacting with the chairman? >> it establishes is conduct. i think there is a general reluctance among some to deliver bad news. i think that is the finding report. >> what does that mean for the agency? >> it can certainly impede our ability to achieve our mission. they have to make informed decisions and have all of the facts of good and bad.

>> rewinding to march of last year when you had a bad news about three banks going down and the lead up to that and you have a chair that has such a serious chilling effect on the staff they do not even want to present them bad information and they fear for their career or a nasty abuse they will give them per preventing or presenting information. >> i am not sure if i understand the question. >> did that have any effect in march? >> is certainly could have. i do not know of a specific incident. >> this really falls on the chair of the fdic board. i think you might be the person to ask. can you give us details you learned during the course of the investigation? >> we described in our report incidents involving the

chairman. we had looked into allegations of interpersonal misconduct as those were a part of the publicly reported allegations that led to the need for the independent review and we described incidents as recently as march 2023 in which an individual reported an outburst. >> what did you take from this? was that a widespread thing or a one-off occasion? >> we obtain reports of several incidents over time including when he was vice chairman of the fdic continuing until at least 2023 during his current tenure as chairman where employees reported experiences with the chair including the

chair losing his temper. what we took from that and heard from employees who reported to us was it could have a chilling impact on communications with the chair although i will also note he did not identify specific incidents that affected the fdic's ability to meet its mission. >> okay. it into that question. the chilling effect. does that establish the reputation he had among employees at the fdic? >> yes in the sense that the incident contributes to the reputation that he has for losing his temper. >> when i asked this question it is bad news. there is nothing but bad news in the lead up to the bank failures in the march of last year in the specifics of that with this reputation he had for

screaming and yelling. the report describes an incident where something like 30 minutes he was yelling at one employee. that would have an impact on their ability to actually tell him the bad news that was occurring in the financial system, which could lead to a question of safety and soundness. clearly from the outside we saw the inability for them to make a decision. it looks clearly connected with that inability. knowing what we know now do you think they should immediately step aside?>> they urgently need a fresh start and the sooner the better.

>> given the lack of specificity it is difficult to understand what types of misconducts may be increasing or declining over time and what type of misconduct is prevalent today. can you respond to that? >> yes. thank you. our report recites that 510 individuals were imported into our hotline and we provide a report. a breakdown of the different categories of reports that came in by subject matter. many of those came in anonymously or confidentially where they are purporting

specifically that the information be kept confidential. >>, and they were anonymous? how many? >> i can take that pit we received 200 reports that the website that allows for anonymous reporting. even some of those reports contain contact information for the individual, so that would be the highest. >> we did include in the appendix to the report approximately 50 pages of examples of reports that came into our hotline. that provides quite a bit of detail.

>> many of them we do note in the report. there are mere allegations that came into the report. we know that limitation in a report but also find that the sheer volume and the nature of

510 reports coming in within a relatively short time of a hotline being open with this type of allegations. >> how many of these occurred at the headquarters? >> we said that many allegations came from field offices we received reports from all six regional offices and receive reports from over 30 of the field offices and also receive reports from the fdic's headquarters. one limitation and the information that was available to us goes to the record- keeping challenges that we had identified through our review

and so one of our recommendations is that the fdic and her more systematic record-keeping. >> they have over five offices for employees to take their reports. this leads to employees feeling like the process is broken or confusing or ineffective and to some degree there is no real incentive to report when people are being browbeat, and that word passes down through the culture. can you describe some of the difficulties with it to follow- up on the line of questioning

in your review?>> yes. we described in our report what we found in our review regarding concerns about the reporting processes and investigation processes. one question that employees have when they experience misconduct is whether that conduct even violates any of the fdic's policies, and this is due to some confusion about the policies and insufficient training. >> they impose a stricter standard as a part of their examination. what is not clear about sexual harassment in the fdic policy that makes it so challenging to figure out? >> one question that comes up is whether conduct that does not necessarily violate the law

but otherwise would count as harassment within the fdic policies does violate any policies. there is a misperception that in order for any conduct to violate the policy that needs to rise to the level of unlawful conduct.>> is this a place you would want to work? based on spending weeks on this project? would you want to work in this environment? >> i think that is a difficult question to answer. we have all said in our statements it's very clear. >> it is an amazing mission. i agree. an important mission. i do not believe that the current director should be in charge of cleaning up the situation, and i am glad

president biden will appoint a new leader. in the interim for taking how long the confirmation process will take it is my judgment we should have the transition today. >> let me turn and talk about the implications of this. we have a softening economy and rising set of challenges and commercial real estate lending. we have the sharpest increase in interest rates since 1980.

what is your assessment of that? they her testimony. it was not impressive what we heard. >> what i would say to that is the state of affairs the fdic is challenging. morale is bad. just fell to second to last in the group in our surveys. we were near the top for quite some time. i think it is fair to say that a lot of staff of lost confidence in leadership and even the board. i think it's fair to say that staff have seen no real accountability, so it's hard to see much commitment to change. i think it is fair to say there is a lot of skepticism and cynicism. i think it's also

important to really emphasize that almost all of the fdic employees are good people. solid public service and deeply committed to the mission despite everything that we have going on. they will keep pushing because if the job of the leadership to make sure they can do their job. >> you are right. we have to have the best morale and talent in the fdic to handle their jobs, but i do not believe that is being done. i believe change needs to happen immediately.>> we will recess after misses velasquez. >> thank you. can you tell us how far back this issue dates, and why employees did not feel comfortable reporting them earlier? >> as we explained in our report these issues are long- standing. we included in our

reports about 50 representative examples of the types of allegations that we learned, and we provided detailed descriptions, and even among those representative examples you have some allegations going as far back as the late 1980s, and going on. >> thank you. is this report become greater over time or less?>> it is difficult to speak to any patterns in terms of interpersonal misconduct identified at the fdic as be 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 about last year. >> thank you.

while this certainly did occur under their watch it also occurred under the chairmanship . is that correct? >> that is my understanding. >> you 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 this event to occur without repercussion? >> i can start up your we do make the finding that those who reported were predominately women from underrepresented groups. we noted that we also spoke to many people who had a positive

experience at the fdic and in fact some of people who did report incidents generally had positive experiences themselves. it's important for us to know that predominately those reporting these issues were those who appeared to be women or underrepresented minorities. >> so can you talk about the good old boy network? >> yes be we received reports of that favoritism. one of the examples that we included in the appendix with the representative examples talked about -- and was reported by two individuals where they observed a manager acting inappropriately towards an employee in the presence of an

executive, and in that situation the executive asked the employee who had been yelled at and the subject of the abuse to apologize and did not say anything to the manager. 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 an example of the good old boys network. >> that we break up this culture? >> cultural and structural transformation we think are important because as we explained these issues are long- standing. there have been previous efforts to bring about culture change at the fdic. we believe that in part because these issues have continued to persist. that those efforts have been ineffective. our recommendations including the appointments of a monitor to oversee the fdic's work going forward are intended to

bring about change. >> the fdic created an action plan. can you speak to the viability of the plan and whether you think it is sufficient to address the structural and cultural changes ? >> as we noted in the report, it does contain proposed actions that are overlapped with our recommendations. obviously both are seeking to address the similar or same issue. we had some additional recommendations that we believe are important to us. the appointment of a transformation monitor who could monitor and audit the steps that are being taken and that this person or the monitor be independent and have the necessary resources be we also recommended the retention of an external expert and then a

recommendation that the review process be conducted by a group that is independent. >> we will now recess for floor votes and restart with mr. lucas when we return. the committee stands in recess.

>> we are hearing from witnesses including a couple of attorneys who investigated the workplace. outlining a toxic environment at the fdic. this is one in a series of hearings on the report. the chair announced he will resign in light of this report and after his appearance at house and senate hearings on the report last month. you can watch those hearings on our website, by the way. c-span.org. more live coverage when members of this committee return here on c-span three.

>> maryland senate race was determined on the democratic side to tell us about what happened. >> there was a very closely watched democratic primarily in maryland to succeed the outgoing senator not running for reelection. we saw two major democratic candidates. vying for the nomination. what made it interesting was that he spent $62 million of his own money. is very wealthy. on this race. more money than anyone has ever self-funded in a senate primary in american history.

nomination, and he's going to make maryland which is traditionally a very blue democratic state into a top- tier senate race. >> let's go back to the primary on the democratic side, why do you think that was, given how much money trump spent as compared to miss alsobrooks, why do you think she was successful and by 12 points?>> the underlying factor here is that you can have on the money in the world but if voters are not buying what you are selling, it is not going to get you all the way there. and i think ultimately what trone found out is he hit a diminishing marginal return on any additional million dollars he put on tv, everybody already knew what he was about and they didn't want to vote for him. the elections are choices and

once alsobrooks spun up her operation and voters knew they had a choice , they felt that they would rather go with her. trone didn't close out the race strongly, he had a number of gaps , he used a racial slur in a congressional hearing, and it was just bad news after bad news for him in the final month, that crucial end of the race and ultimately it shows in the results. >> so, then you were talking about the senate race now between former republican governor of maryland, larry hogan, he was very popular, and angela alsobrooks. even though as you were saying, maryland is very much a democratic, why do you think this could be competitive?>> because of larry hogan's popularity. we saw him win two elections in 2014 and 2018, won in 2014 but

a landslide victory in 2018 which you recall was a good democratic year nationwide, but in maryland, hogan was able to appeal to independents and democrats in the state. if you look at his numbers, he is as popular in some cases, maybe not now but a year ago probably as popular among democrats as he was among republicans in maryland, he has significant support among black voters which are traditionally democratic, he has very high numbers among independents and he brings a lot to the table. that makes him competitive, and even running for senate often times, they aren't going to seal the deal. this is long because voters really do pay attention to the differences between a governors race and a senate race.

such as maryland or massachusetts or vermont, they appreciating having a governor for the other party. to provide some semblance of balance at the state political level. but voters understand that control of the senate is a very different thing. it really matters on a national level whether democrats or republicans control the senate but party affiliation of any given senator, i would argue is a more important thing than the party affiliation of a governor and larry hogan is a republican in maryland is a democratic state. even though voters like him, they don't like republicans, they don't want republicans to be in charge of making policy at the national level and that is going to be the democrats most compelling argument in the

fall.>> we are focusing on the senate and campaign 2024, if you have a question for our guest, jacob rubashkin. you can give us a call right now, the lines are by region this time, sorry, by party. you can also send us a text, 202-747-8003 and we are on facebook and ex. let's talk about west virginia that has joe manchin, democrat announcing his retirement, what is happening there?>> this state is crucial because it is by power -- by far republicans picking up the opportunity. the state is split and if trump wins the presidency, then all the republicans need is to flip

one seat in the senate in order to reclaim majority of that 50- 50 split with the vice president tie-breaking vote. and west virginia is that seat because joe manchin is the only democrat who could hold a senate seat in west virginia, this has become so republican that it was a miracle he was able to win in his last election in 2018. a number of factors, in that year it was a really good year for democrats again with the trump presidency motivating and energizing democratic voters in all corners of the country, even in places where democrats haven't shown much strength lately. so he had that going for him, he had a week republican opponent, who is going to be the next governor of west virginia but at the time he came out very bruised from a primary. he did not have a lot of money. joe manchin was popular, he has a real appeal to the former democrats in the state that were never cast a ballot for

another democrat except for joe manchin. he was able to win by under three points, so i think he saw the writing on the wall, that is why he decided not to run for re-election. governor jim justice who is the outgoing governor is going to be the next senator, he won a convincing victory in the republican primary last night and should have no problem winning the general election in the fall. >> zooming out to the senate in general, your recent newsletter had this title with a favorable map and donald trump leading joe biden in the republican race, republicans have a good majority to win control in 2024 point >> it is 51 democrats, give or take a few independents and 49 republicans, in order to get to the majority, republicans would need to win two seats, they already have one in the bag in west virginia. so that means if they win just one more seat, if they flip, they will have control no

matter who is president. but it gets better for them because if donald trump wins the presidency, we know that a 50-50 senate is broken by the vice president, so if the vice president is republican, then a 50-50 senate is a republican senate. if we just look at the map right now as it is and we move west virginia to the republican column, that is a 50-50 senate. if the election were held today, it is pretty clear he would have a very good shot at winning and democrats are really on their heels in the senate, it is going to be very difficult for them to maintain their majority and it is basically going to be impossible for them to maintain majority if trump wins the presidency this fall. >> inside elections just changed the rating for the arizona senate race, tell us what is going on. >> it is not all bad news for democrats in the senate, i know i sound a little bit negative,

but there are a few bright spots and one of those is arizona. this was a very complex fluid race when independent, kiersten sinema was talking about running as senate, when she got out , it became a lot more clear how the race was going to look, and kerry lake, the republican nominee or likely republican nominee heading toward a clash this fall and basically what we assessed was that ruben has some real advantages in this race, he has a tremendous financial advantage and he has the opportunity to introduce himself to voters in a favorable way whereas kari lake has less money and she is deeply unpopular in the state after the 2022 gubernatorial run. you look at the posture of national republicans, who are

very excited about montana and ohio and a few other states and who do not want to talk about arizona, who are not as convinced that arizona is going to be competitive and may not put any money toward helping kari lake win and all of that points to a picture where democrats are at least slightly favored to hold that seat. >> let's talk to callers. michelle is up first. go ahead.>> i wanted to speak to the maryland politics, as a maryland resident, it is my pet peeve when maryland is tainted as a democratic state, larry hogan was very popular, he did win the re-election, but maryland has had another republican governor, in the recent years. and i can't think of his name,

but i would say perhaps your guest could, but if you look at the counties in maryland, the only strong democratic counties, predominantly african american, anne arundel county and howard county, but howard and montgomery county are not strong democratic parties, every other county is not democratic. and that is why we do have this flip-flop, you have the other republican governor who wins elections in maryland. so maryland is a strong democratic state because we have -- >> so, michelle, have you decided to vote for larry hogan

then in november?>> i did vote for larry hogan previously, twice. and in november, you know, angela alsobrooks is the first african american woman who was sent to the senate, so i will vote for her for that reason, i didn't like how she ran our county for the most part, she did bring crime down and it was a very difficult time for her as a county executive in the current political environment we are in. so, yes, i will support angela alsobrooks. >> jacob? >> i think that is a good example of why larry hogan is the underdog in this race, you had voters that voted for him not once, but twice in

governors races that are not even at this early juncture really talking about voting for him in a senate race. he won over a lot of voters who would not otherwise vote for a republican because he was running for governor and it's just going to be a different dynamic in the senate. i think the one thing i will say is that montgomery and prince george's, and baltimore city as well make up the population of the state, these are the most populous areas and as a montgomery county native myself, i would be comfortable calling it a solidly democratic county when we have our county elections, it is democrats up and down the board. but, i do think that there is a distinction between governors races and senate races, bob ehrlich who is the other governor that the caller was talking about who served from 2002 through 2006, he lost re-

election in 2006 to martin o'malley. larry hogan obviously, these are the exceptions that prove the rule. it is very difficult for a republican to get elected to any statewide office in maryland let alone a senate race which hasn't happened in nearly 40 years.>> let's talk to richard in augusta, georgia, a democrat. good morning. >> good morning, my concern is that the democrats in the senate would be very crucial for the democrats in order to get, if we need to, a newer supreme court justice, it also the last time i checked, the constitution, it says majority vote rule is voting in that the filibuster needs to be eliminated because mitch mcconnell, when he gets the filibuster, he runs with it.

the democrats have got to give president biden, if he wins the election, a vote majority in the senate. and that is what we need. so that we can stop this craziness of those nine believers in the 2020 elections because it was very insecure. >> richard, any comment, jacob? >> the senate is very important and voters understand that, the supreme court confirming nominations of any variety but the supreme court especially is one of the crucial functions of the senate, it is what they do at the house doesn't get to do, it is especially important to them. democrats are staring down the barrel of the most conservative supreme court in generations and one that looks likely to persist for a generation. especially if trump wins the presidency, if he has the

republican senate, there is ample reason to believe that the older conservative justices on the court justice, justice thomas, might decide to call it quits and be replaced by a younger justice in their 40s or 50s who could conceivably serve for another 30 or 40 years, cementing that conservative majority on the court. if democrats are able to win the presidency and hold the senate, i think there would be tremendous pressure on just the oldest member of the liberal wing of the court to step down but there would also be a lot of interest of course if either justice thomas or justice alito left the court on the democratic senate as well, that would be an opportunity for democrats to transform the court and try to claw back a little bit of a territory that they have lost over the last couple decades.>> and you alluded to these races briefly, that is montana and ohio, those

senate races, talk about those because you are calling those toss-ups. >> these are the most crucial races on the battlefield. these are the entire story when it comes to control of the majority. jon tester, the democrat in montana, sherrod brown, and ohio, if those guys win, the democrats have a shot of keeping the senate, if they lose, there is no path, they are both running and states that trump carried in 2020, in montana by double digits and ohio by high single digits and will carry again in 2024 point means they have to win over trump voters and we had 70 some odd senate races concurrent with presidential races over the last two cycles. of those 70, just one has gone the opposite direction of the presidential race, that is only one senate candidate from the

republican party has won their state while the democrat was winning at the presidential level, that was susan collins in maine in 2020.>> how are these two still toss-ups, it seems like it is still pretty bad for the democrats. >> they've got some things going for them, they have incumbent strikes, jon tester is popular, he has the appeal in montana that has persisted even as the state has become significantly more republican. they talk about a purple state, montana used to be a true purple state, in the 18 years since jon tester was elected, the state has really become a republican stronghold but he is still popular. he has an appeal as a farmer, the way he looks, the way he talks, he connects with voters. his republican opponent is relatively untested, he is a first-time candidate navy s.e.a.l. n, very wealthy, runs a

business but he has made some stumbles that we see in first- time campaigns, he has given democrats an opportunity to litigate aspects of his military record, his business record, and perhaps more crucially, he is not a montana native. he only moved to the state in the last decade, that is a strategy he has used very successfully in previous runs, painting his opponents as out of stators. so i think democrats have a tough challenge, they have an opening in ohio, a similar story, sherrod brown is a very good fundraiser, he has an appeal among the working-class voters in eastern ohio that has shifted away from democrats over the last decade or so. his opponent, bernie marino, relatively new political figure, lost the primary and is back this time, has some stuff in his background that i think democrats are going to litigate as well. he is a candidate quality with

local issues, republicans want to nationalize both of these races. democrats want to keep them as small as possible. and whoever wins will go a long way in illustrating whether we can still see politicians survive off of the strength of their personal brand over the national environment.>> let's talk to mary in potomac, maryland.>> hello, the reason i'm calling is to just say that anybody working for republicans is working against the best interest. republicans are threatening social security and medicare. which is going to affect millions of people, including us who are seniors and who have been getting social security and depend upon social security for paying off bills and taxes and everything.

also, i can't imagine anybody in their right mind, knowing what trump is like, trump is only for trump, nobody is more important than trump, he works only for what is beneficial to him.>> mary, getting back to the senate race, are you going to be voting for angela alsobrooks? >> no, i'm voting for trone. >> you know he lost, right?>> no, i don't know he lost.>> yes, sorry mary.>> yes, angela alsobrooks is going to be going against former governor, larry hogan. >> i used to be a republican, then i moved because i realized, they do nothing but

interfere, they don't advocate for the middle class, all they want to do is endorse everything trump does and by that, i mean he wants to give the biggest tax cuts to the richest.>> okay, mary, let's get a response. >> maryland has gotten more democratic, i don't think mary is alone in being a former republican, and will probably vote for a democrat in a general election, joe biden won a larger victory in maryland then i believe any democratic president, he won maryland by as big a margin as trump won idaho, these are big numbers we are talking about and it is because maryland of all states is uniquely anti-trump and as well positioned for the emerging democratic coalition. again, not to hammer the point home too much, but larry hogan

has an uphill climb in this fight in the fall. >> margaret in wyoming, independent, good morning.>> good morning, i do have a question for mr. rubashkin. i would like to know what is going on in america, the open immigration, the open border and the heavy deficits that the united states is incurring. under the biden regime. i would like to know if that is having any effect on the voting that is going to take place in maryland, or anywhere else in the country that would be turning away from the ideological agenda of the democratic party, more towards the center. that is my question.>> what do you think of those issues?

the border or the deficits. >> we have seen immigration emerge if one of, if not the top issue for republicans this election cycle. in 2022, it was all about the economy and cost of living, in 2024, republicans wanted to be about the border and immigration policy, not just in border states and arizona, not just texas but in montana, their number one issue against jon tester, the border. in ohio they are going to talk about the border and drug trafficking. in maryland, which is not a southern border state, larry hogan when he needed to win votes in the republican primary because he has got some issues with republicans because he is a little bit more moderate, when he had to win over republican voters in the primary, he went to the border and he ran ads talking about

securing the border, that is how he was appealing to republicans in maryland. this is going to be a top issue this fall, republicans are going to talk about it nonstop, it is an open question whether it will be enough to get them across the finish line, democrats have some issues going for them as well but absolutely, i think the border conversation is going to be a big-ticket item in all of the senate races in a couple months.>> jacob rubashkin , deputy editor of inside elections, you can find their newsletter, thank you so much for joining us. joining us this morning from jackson, mississippi is naacp president and ceo, derek johnson, thank you for your time this morning, let's talk about a recent cbs poll, based on the exit polls from 2020 that showed black share of vote in key groups, biden share of votes in key groups, according

to the exit polls, his support was 87%. in 2024 according to a cbs news poll, it is now at 76%. why do you think that is?>> first of all, you have to believe the premise of the validity of the polls, they have not been accurate and really accounting for the sentiments of americans in general, particularly african americans, we have seen over the last cycles, the polls got it wrong, remember in 2012, it showed that romney was winning the election, only for the outcome to be very different. for the naacp, we move away from the notion of exit polls and traditional polling because they have proven to be undeniable. we do care about african americans participating in this election cycle as important for all citizens to be able to cast an effective ballot and that is what we focus on.>> when you

talk to black voters or members of your group, what are they telling you about their support for the president?>> as a nonpartisan organization, we are less concerned with which candidates and voters choose, particularly our members and african americans in general, we are more concerned with ensuring that we are protecting this democracy. that every voter can cast an effective ballot and we understand the choices that voters must make, it is not only about the top of the ticket, but it is the policy issues of concern, whether or not families can have gainful employment, we have seen record unemployment over the last four years, the lowest trend in over 50 years. we have seen student debt cancellation which drastically impacted public service workers, teachers and officers and others who went to school. we are advocating to make sure

that low income military veterans are relieved of medical bill debt. medical bills is the number one debt that americans are impacted with, so we need solutions, we need candidates who can speak to the solutions, we need individuals who care about democracy and we need individuals who care about the future of america.>> who is the best candidate for that?>> that is a choice for individual voters, we see the options, and for this election in many cases we may be looking at the business between a functioning democracy or something less than democracy, so we are going to side on democracy, we want an individual who cares about the future of america. not to follow fascism or this divisive nature that we currently see this climate in and to ensure that all americans regardless of our differences are valued as

citizens and those rights are protected. >> how much money will the naacp spend on campaign 2024 and how will you spend it?>> this election cycle we are focusing on individuals who are registered to vote but don't always vote and we are concerned that if americans sit out this election, particularly african americans, we are not going to get the outcome in terms of policy that is required. we are going to spend upwards of millions of dollars for this election cycle part of which is invested in local communities so organizations including our local branches who are more effective to understand how to turn out their neighbors and empower them as also drill down on a message to talk about protecting our democracy and advancing public policies that impact all citizens particularly african americans. >> for african americans and those infrequent voters, is it that people are telling you

they are not going to vote because of the headline like this from politico, biden's black voter troubles are setting off alarm bells, the muscle -- message is that the president's problems are real and he is running out of time to fix them.>> after this publication, let's focus on policy issues that americans care about. as we move from these headlines for click bait or headlines to generate ad revenue and focus on the subject of policy choices that americans need to make. we have to confront the reality that we are in the midst of a mental health crisis resulting in individuals who are unhoused. we are in the midst of a crisis around what is the future of work and the impact of artificial intelligence and how do we train our young people. we are in the midst of a rise of hate crimes that we need to address to hold people accountable so we are not

living in a 1950s america, but more of an america that must compete in a global economy. those are the conversations that we need to have as a community and society so we are competitive globally and move away from the level of tribalism that we have seen emerge over the last several years.>> what do you think is the appeal of former president trump for some african american voters?>> i don't know what his appeal is because he is a bottom feeder in terms of divisiveness and other things, he has proven to be untrustworthy. now we have a convicted felon who is on the top of the ticket for one of america's leading parties who have proven not to be honest with american voters, not to be honest in the court of law, not to be honest about the true nature of what he is doing.

but what he is doing has less to do about the citizens of this country and more to do with the ego, egotistical behavior he has displayed. we are looking at an individual who cheated on his pregnant wife with a star, and trying to pay people off with a violation of the campaign-finance law, why is this even a conversation when we are at the juncture of being a relevant country in a global economy looking at what confidence we need to resolve. it is unfortunate that the citizens of this country are forced to make these type of decisions and i hope in the future we will not be at this juncture ever again.>> will the naacp the campaigning against the former president?>> again, we are nonpartisan, we will raise critical issues, we will hope that our members will make

the right choices when they see, what is in the best interest of their best interest, their families best interest, the community's best interest and democracy's best interest.>> here is tim scott on sunday talking about what he believes sets former president apart from former president biden. >> the issues that are going to drive the results of this election will be can donald trump close the southern border, the answer is, he already has closed the southern border. can he bring inflation down under 2%? the answer is, it was 1.4% when he left office, can he create jobs for the poorest americans westmark good news, he created more than 7 million jobs with the highest percentage going to women, african americans, hispanics and asians. what we know about four years under donald trump is we had

low unemployment, low inflation, high enthusiasm, law and order in our streets and we've had the exact opposite under joe biden, we had incredibly questioning inflation leading to high interest rates. crime in the poorest communities, devastating single mothers like the one that raised me and we've had the greatest invasion in american history across our southern border, left wide open, unsafe because joe biden on day one started on rivaling border security.>> your response? >> well, i'm not really for sure what set of facts senator scott is speaking of because the reality is, in many cases, the complete opposite. we've had an unfortunate scenario on the border with taking children from parents where there was a promise to build a wall along the border,

the wall was never built. we have the track record of the prior administration having a worse record in job creation. i can go on and on, unfortunately, the spin doctors of the conservative movement, when you do a fact check, most of that will not hold up. it sounds great for a sound bite but, it is inaccurate.>> let's go to nathaniel who is in new jersey. good morning to you.>> good morning, thank you so much for having me on. first of all, i just want to thank the naacp, they have been a bedrock in our community. i think coming from the black community, there has been a big disconnect where we have so many of our members saying they are not going to vote.

and i don't think they truly realize these cases when they are not voting because it will allow the maga people to get back into this country, they want to give us to a level of servitude. we don't understand how they stay at home and not voting. people are dying, people are sacrificing their lives, so it is our responsibility to vote and understand the power of voting. i just want mr. johnson to speak more about that. when you don't vote, you are voting towards the other side and that is going to hurt us tremendously.>> absolutely, i was talking to a group of young

men in detroit about two weeks ago and one of the young guys, about 28 years old, he was thinking about whether or not he should participate and whether it would even matter. i listened to them and it is important for us to listen to the young people, to really understand their point of reference because we all come from different points of reference. he finished, i asked a few questions. we are coming to order, we will return, thank you for the panelist for remaining. i will recognize the gentleman from oklahoma, mr. lucas for five minutes.>> thank you, i appreciate you yielding for me for questions, you might know

my tenure in congress, we dealt with a number of sticky questions, things that had to be addressed, things that could not be allowed to go unchallenged. and i take a little bit of a different perspective sometimes in the questions i ask so i start with suggesting mr. kim, your firm was chosen to conduct an independent review for the culture in allegations of sexual harassment and misconduct, just toxic culture at fdic. you and your colleagues led the team for this investigation. has your team conducted investigations into workplace misconduct before?>> yes, we have.>> 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?>> 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 into personal misconduct at the fdic including hostile, abusive, inappropriate conduct as well as management's response to these allegations. and the fdic workplace culture including practices that might discourage or deter the reporting of this type of misconduct, that was the scope that was provided.>> so we might better understand, can you elaborate on the steps your firm took to ensure independence of the investigation to safeguard the report against any bias? >> yes, we obviously as lawyers 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, kept walls internally at the firm to keep two separate out any lawyers who do banking work and we conducted a review in a way that ensured that independence, but also independence within the firm but also from within the fdic because there was a need for independence in that regard as well.>> there are some who have been distressed about the focus on the current chairman rather than his predecessors. during the course of your investigation, is significant issues uncovered regarding previous chairs that contributed to the toxic workplace at the fdic. how would that have been included in the report?>> we did not intend to or focus on particular chairs on that as we made clear in the report, the workplace culture issues were

long-standing, that have spanned for many years across different chairs. we addressed the conduct of the current chairman because public reporting relating to his conduct and reputation was already reported by the time we were appointed and 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 that we deem appropriate and necessary to cover his conduct as well, in the way we did in the report. >> continuing my line of thought, of course as you are gathering all the information and determining what is relevant to the investigation, not every piece of that would

be included in the final report. from your interviews with current and past employees, was there evidence of substantial misconduct, misbehavior from the previous chairman that was left out of the report?>> as you have noted, not everything that we learned was set forth in the report, that includes with respect to anyone including the current chairman. what we included is what is relevant and necessary to understand our findings and to support our recommendation, that is what we included in the report.>> one last question, would you expand on his leadership as a challenge to the fdic cultural transformation that we all want?>> 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 on the mandate of our review.

we wanted to review and investigate the facts set forth to understand our findings and the facts that were necessary to support our recommendation.>> your time has expired. >> thank you, i yield back.>> with that, the gentleman from massachusetts, mr. lynch is recognized for five minutes. >> thank you, i want to begin by saying there is a certain element of disingenuousness in terms of the republican position on abusive women in the workplace. we hear much complaint about it here, with respect to a democratic appointee, who has admitted he is leaving office. but, i just want to point this out, all of my republican colleagues are supporting president trump, former

president trump who has got an atrocious and long record of poor treatment -->> mr. chairman?>> i'm speaking, this is my time. and remember, the relevance here is the next president will appoint the fdic chair that we are questioning 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 star -- >> that is not a correct -- >> this is my time.

this is my time.>> i will suspend just for 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 and you will have your time. with that, made a clock resume. >> thank you, i appreciate that. you know, we are talking about someone who has been convicted by a jury in a civil court for sexual abuse. and i could have brought in a tape of the access hollywood thing where he talked about how he grabs women's and -- genitals kisses them right off the bat. so i want to look at what we are doing here today and whether we are truly looking at

whether they are mistreated in the workplace, there is reason to question the genuineness of the criticism on my colleagues part. i do want to ask, i'm a former u.n. president, i was a union steward, 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, why was not mr. kim, why was not the union involved here? as a union steward, i would be the first person in the workplace to know about that activity and it would have been a duty of fair representation on my part as a union steward to go to bat for those women and employees that were treated like that. what happened here? this is a union workplace, the

national treasury employees union is the collective bargaining representative for these employees i believe. so what happened? where was the breakdown there?>> thank you, you are correct that the national treasure employee union is the relevant union and as we explained, we spoke to union representatives as a 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. >> how many grievances were filed? if i'm the union steward, i would file a grievance every single time something like that happened.>> we know that grievances were filed along with complaints under the

antiharassment program and under the fdic equal employment opportunity policy. >> okay, and where did those grievances go? is there a procedure where they could be addressed? >> the first step was for any grievances to go to a supervisor all the way up to the chair or the chair's designee. >> how many were sustained, and how many, what action happens as a result of that?>> what we say in the report, 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 out of 92 complaints that were made, between 2015 and 2023 under the antiharassment policy, the most serious disciplinary action that was taken was suspensions and that was in two instances.>> thank you for your

indulgence, i appreciate it.>> and the chair would also like to remind the members here, about what the hearing is supposed to be about, but also about rule 17, rules of decorum do require us to not impugn members, the other members, the president or we would include nominees and that. with that, the gentleman -- >> will the gentleman yield? >> i will not, i also know that folks may use their five minutes as they wish.>> 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?>> no.>> would you please clarify?>> i will adhere to rule 17 which means we should not mischaracterize members or crew members of government or past members of

government. the gentleman from texas is recognized for five minutes.>> thank you very much, i would like to take a further approach , miss mainoo, thank you for your comment today, both of you used the word several times retaliation. are you both lawyers?>> yes.>> what is the federal law related to retaliation at least in your opinion, that this whole agency, all the management and others have been advised of because i have heard you twice say there is a concern about retaliation. >> an example would be the antidiscrimination laws in addition to making dissemination based on protective classes, unlawful

would also cover any retaliation against individuals who make complaints about this rumination.>> would that be the same as a whistleblower or is a whistleblower a different type of status, if a person is allowed to give feedback their name, information, specific information, is that treated differently under the law then they whistleblower? i think the answer is yes.>> could you rephrase your question to make sure i understand?>> yes, ma'am, and thank you. there is feedback that is 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 where you get back to them, you have already said yes there would be federal law related to protection of those people, at least as it relates

to someone retaliating against them. is that the same or different law that generally would, or would apply to whistleblowers and did you have whistleblowers?>> there are also specific whistleblower laws that protect individuals who report violations of law, so that is another example. >> okay, so now i have heard both of you mentioned retaliation. probably as at least in your mind as a source of probably what is still there. what has taken place in relationship and who would be responsible for that observation and fixing where it dealt with retaliation in this fdic agency?>> to elaborate on the concern about retaliation, the concern that we heard was in addition to confusion about

whether any conduct violated fdic policies and who to report to, there was also a concern about whether fdic employees could trust the reporting channels. >> yes, i want to go to who is responsible for directly taking that issue on with the knowledge that we have heard, the current leadership is incapable of effectively managing the organization, who is taking that issue on within the agency, notwithstanding they should be not waiting for a new person to be approved by the united states, and who is taking this issue of retaliation on right now and has been in the past year? who? name that title.>> congressman, i believe the full board needs to be engaged. >> okay, now the board, you represent the board, 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?>> the fear of retaliation requires cultural and structural transformation, there is currently the process that is broken.>> when will that be fixed, since you are the responsible party?>> the board is currently taking action. >> when will that be fixed and is that require a new head of agency? >> it is being fixed currently.>> would you please provide this committee, both republicans and democrats and answer when that has been fixed, notwithstanding who the directory is, it is the board. i sure appreciate your help and thank you very much. i just think that some of the things going back to the conversation about what needs to be fixed today, within a division of labor, there are

certain things the new chairman would need to be responsible for and there's also things that are currently issues, and i appreciate you helping, thank you very much.>> the gentleman's time has expired, with that, mr. sherman is recognized for five minutes.>> thank you. we have got a problem since the 1980s, the reports i won't repeat just because they have been stated so often, but they show a horrendous picture. now we are close, well, i can't say solving, but to making this agency as good as it can be as far as the 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, greenberg is resigning, 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 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 greenberg announced his retirement. the title of this hearing is about the toxic work place culture at the fdic. if the senate unduly delays the confirmation, we 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. some have argued that somehow signature bank and first republic are a result of greenberg's temperament. did these banks fail because they had bad management and they failed to account for interest rate risk? or did they fail because of his personality? >> thank you for the question, the occ does not regulate silicon valley bank. >> i'm asking you in your role as a member of the fdic.>> so, the factors that led to the failures are well laid out in the reports that the fdic -- >> do any of those reports say it is greenberg's personality, that is not mentioned? and has anyone, you are on the

fdic, has anyone at the fdic identified to you, i was going to bring this first republic issue up, or i failed to bring it up because i was worried about the chairman's personality? has anybody stepped forward and said the personality stopped them from taking action?>> no.>> the national treasure union represents the employees, i wonder whether mr. mckernan can commit to working with the nteu and to move forward with improving the workplace culture. >> yes.>> i would point out that the 6600 employees deserve a good workplace culture, but the 330 americans -- 330

million americans that deserve good bank regulation. if mr. grunberg resigns before successors confirmed, fdic could be split 2 to 2. if the fdi was split and we have another big crisis, the silicon valley bank two, is it possible that the fdi -- fdic would split between the commissioners? >> it is hard to speculate about that. >> but there is a reason why you have an odd number of commissioners, correct, so you are less likely to split 2 to 2 point >> i don't want to speculate about that. >> last i checked, 2 +2 is 4, i

would finally point out that silicon valley bank also failed because interest-rate risk was not built into sufficiently, our bank examination process and we need to market all long- term instruments that banks hold, whether it is available for sale or held to maturity and until we do that -- >> the gentleman's time has expired, the gentleman from missouri, the chair of the national security subcommittee. >> thank you mr. chairman. thank you all for being here today, this deserves a lot of insightfulness and insightful comments and questioning, so my first question is to mr. hsu

this morning. do you take this very seriously? you said you are committed to holding any employee engaging in misconduct and countable -- accountable. why are you not taking action to fire him at this point? >> that decision is for the white house and senate. >> can the fdic board do something about this? >> the board does not have authority. >> what happens if mr. gruenberg can -- commits a felony and winds up in jail tomorrow? who takes over? >> i think under the rules, the vice chairman. >> all be darned. okay, do you take this report

seriously. >> absolutely. >> in your testimony you hope accountability is not far off 50 believe this? >> do i believe it is far off? >> -- i am not particularly optimistic we will see accountability soon. >> i am concerned about that part. you also say that reconciling the report comes down to the question of leadership. root out wrongdoers and make an example of them, we need leaders. why have you not taken action? why are you not pushing further for mr. gruenberg to resign. >> i am pressing for the board to take a more active role. i think there's a real question that we need to consider during this interim while waiting for a new chair. we are waiting for the current chair to resign. my think the board needs to take a more active role.

i have been pushing for that. >> i appreciate that. i think you are talking about having leaders and solving these problems. you guys are in a position of being leaders in this situation. as leaders, you can step up and stop the nonsense. otherwise, you are an enabler who continues this to go on. you know better than mr. gruenberg in my mind if you allow this to go on. it has got to be stopped. is 25 a crime? >> yes. >> in your report, you indicate in this hotel a lot of the f.b.i. ftse folks go to in training, there was a tran35 that occurred, besides 24 more instances of harassment. with anybody prosecuted for that? i believe there was an alleged rape presented to the local police department. >> no follow through on that? >> not that we are aware of.

>> so we have an alleged crime here the nobody took care of? was it swept under the rug? this is a very serious crime. i don't understand how they get away with this, personally. you are telling me it was swept under the rug? >> we are not aware that it was swept under the rug. we are aware of the information we were able to obtain for the local deputies -- police department. rape is a crime, of course. >> allowing criminal activities to go on in the agency in this case. >> just to add, there were two reports of sexual assault. for one of those assaults, we understand from the fdic office of inspector general that no charges were filed because the claims could not be

substantiated by law enforcement. as to the second incident, we understand from the office of inspector general that the investigation into that incident is gone going. we were not able to get more information. >> intimidation from the director have anything to play in that, do you think? >> there is no indication the chair related to this. >> very good. >> mr. hsu, you took part in the two that occurred when there was a major issue. but you have let this crime go unchallenged. sexual harassment and racial determination, which is documented, continued to go unchallenged. i am curious as to why we don't take further action. it boggles my mind. but it is about politics, pure and simple, in my mind. we have a republican who was a vice chair. you have a republican in the chair. it is all about that. is not about what is good for

the people of the fdic and what is good for the banking industry. it is about politics. both of you sit in a position to stop the nonsense. >> time has expired. >> the chair recognizes the gentleman from texas for five minutes. >> thank you, mr. chairman. i think 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 five members, mr. kim? >> the board of the fdic? >> yes. >> yes. >> do you agree that, let me ask you, how many women are among the five? >> there are no women among the five. >> five men. >> correct. >> i believe we live in a world where it is not that's not enough for things to be right, they must also look at. by the way, no disrespect to

any of my friends on the board. i think highly of you, but it 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 you made, i believe it was you, mr. mckernan. you made the comment of this being misogynistic. explain, please. >> explain what i mean by that? >> yes, sir. >> this is a characterization of the report. they describe the workplace culture. to me, we have biases slanted in favor of the male workforce.. have you heard the term good old boys? >> absolutely. >> is that what we're talking about? >> that's right. >> someone used the term patriarchal. would you speak up, madam? i believe you did. >> i did use that term. 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. >> madam, 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. >> could you rephrase the question? >> 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? >> we did not take a position in our report about -- >> report does not address that

? because that is beyond your mandate? >> it is beyond our mandate. >> absolutely. that means you are not recommending that the vice chair become chair of the board, are you? >> we are not taking any positions. >> you say they should be done expeditiously. you are not indicating it must be done expeditiously so the vice chair can become chair, are you? >> we are suggesting that are recommendations to be implemented expeditiously to improve the workplace culture at the fdic. >> exactly. but not so a specific person can become chair? >> were not taking any position on who should become chair. >> in this toxic environment with five men at the helm, can you find a reason why a woman should not become the next chair? in your report? >> absolutely not. >> it 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. >> i believe that with me. >> a fresh start. a fresh start, in my opinion, should include bringing a woman , placing a woman at the helm. a woman chair. this can be difficult for my colleagues across the aisle to embrace because we quite regularly have all men on our panels, and white -- quite regularly i remind them, quite often the reason we have females is because the democrats will decide that we need to have some balance. it is not unusual to have all white men. this is not getting a feel of where we are, it is the mentality.

this mentality is pervasive, not only on this board, this fdic, but this is something we have to deal with across many lines. 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. >> the chair will now recognize himself for five minutes. ms. mainoo, i have a question for you. i am hearing between the lines for my colleagues on the other side. it seems like they seem to think your report was somehow incomplete. was it incomplete? >> no, our report -- >> was a biased? >> it was not. >> when the sensationalize? >> it was not. >> you believe it is an accurate reflection of the leadership and culture of what was happening of the fdic? >> we do. >> okay. i will note, by the way, that we had a woman chair of the

fdic, the last chair. mr. hsu helped remove her. 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 sorta 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 for the work they did attempting to improve the agency culture. is that accurate? >> we made very clear in the report that the workplace culture and conduct issues were long-standing. >> who was attempting to fix it? >> all chairs have taken steps to address them.

>> i understand your delicate position, mr. kim. the simple fact is that you had an open-ended report. there were not problems with the other two female chairs, but a problem with this one. i will move on. a few weeks ago the fdic -- board of directors terminated the special review committee, leaving an 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 employers, employees, sorry. mr. mckernan, what is the role of the board in day-to-day operations. you were starting to say you were advocating for that. >> i was of the view that we really need 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, to oversee implementation. >> chair gruenberg did not see

the problems for 10 of his 13 years as chairman. should the board play a bigger role in overseeing the cultural change? >> that is my view. >> what can the board do specifically? >> one option would be to establish a board committee. >> but that appears to be rejected by mr. hsu. is that correct? >> i believe the full board needs to be fully engaged to back the actions taken to fulfill the recommendations and that they are long-lasting. >> all right. 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, there was a wall street journal article, the title was, he survived a beat down from congress, but can he survive one from his own staff? mr. hsu, do you still believe chairman gruenberg delete changes in the culture during the remainder of his time?

is he the right man, the right time with the right ideas? >> my focus is on the employees of the fdic. >> is he the right person to lead this? >> so long as the chairman is delivering on commitments and taking actions and supportive. >> i'm taking that as a yes. it is conditional on taking those actions. >> okay. that is a conditional yes. i am not sure why you're so afraid of him, quite honestly. why you can't admit the obvious truth. that is disappointing. i know, and i believe you know, that the fdic employees would disagree with you. 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 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 being accused, or being alleged, right now. it is hard to view that is not being for political purposes but i would say it is time for you to step up. for you to be able to change that. >> -- let's do what is good for the employees. >> i have been completely focused on trying to establish three actions critical to reestablishing trust with employees. >> my time is expiring. you also need to remove the chairman. with that, i yield back. the gentle lady from ohio, who is also the ranking member of the subcommittee on national security, is now recognized for five minutes. >> thank you, mr. chairman. let me start by reminding my republican colleagues that the hearing on was the last year he were democrats are very

critical of him for failing to address the long span culture of abuse. republicans continue to point blame on mr. gruenberg. well, he has resigned. i applaud president biden for putting a critical eye on identifying a person with the experience, background, and a person who has been tested and supported by democrats and republicans to be confirmed. the next potential fdic chair that i think we are expecting to be nominated meets all of those standards. as we have heard before from our ranking member and others, goldsmith romero. she meets all of those standards. if republicans care about the organization, the people and moving forward, they would follow democrats and put people

over politics. i think that, you know, there is a lot of hypocrisy in my opinion, mr. chairman. republicans being outraged by sexual harassment, misconduct in this context, but not in others. my senior republican colleague from missouri asked the question about rape and if it was a crime. it was answered by our expert witness as yes. but i don't see republicans calling for the resignation or removal of your last party leader for the exact same conduct that trump had. hypocrisy. now, i think it is very interesting -- if it is in

alignment to say he is afraid of someone that he had to work for, and trump has done many of the same things. item within rule 70, which i just took the last 20 minutes to read, mr. chairman, as much as anybody else over there talking about president biden. i think it is interesting. i did not hear you answer the question if you are afraid or ever felt afraid. i will extend it. have you ever felt threatened or afraid of the chair? >> no. >> and to your republican, have you ever felt threatened or afraid of the chair? >> no, congresswoman. >> thank you.

now let me go to another question. i want to thank my colleague who talked about having a female . i am sure he was speaking in the spirit of diversity and inclusion. to the acting comptroller, democrat and republican, i would like to start with you to understand the diversity and inclusion efforts at the fdic. staff diversity at this regulatory agency, i believe, continues to lag. it is clear it is not just diversity, but also inclusion. it must be improved, i believe, within your agency. not only women, but people of color. i think it is important when you talk about the culture the people come from, whether it is rural america, suburban, it is not just race and gender. it is far more than that. what steps could you tell us

the fdic is taking to do that, especially at the gs-15 level? we only have about 30 seconds. if you don't know, say you don't know. >> i believe the action steps laid out in the agency action plan, as well as the recommendations in the report, will go a long way to creating the environment that will enable -- >> you think there's enough of the report to address that? >> it is a starting point. >> okay. to your colleague. >> congresswoman, i agree. recently support your point about the need to 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 key point. >> you can give me a written answer. are other two top recommendations that you would give that would be the most? my time is up. >> we will take that in writing. with that, gentleman from kentucky, recognized for five minutes. >> thank you, mr. chairman.

as you all know, on the 20th chairman gruenberg announced he would resign after the biden administration nominates and the senate confirms his new successor. given the culture and toxic workplace environment, that is a very swamp like thing to do. this is why the american people hate washington d.c. it is not a resignation. resignations should have cut months ago. is that, it is not a resignation. in fact, according to a wall street journal article, mr. gruenberg suggested he is stay because if he leaves the agency will have two democrats and two republicans. is is supposed to be an independent regulatory agency? it is not a partisan agency. he 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 that he is about cleaning up the mess he created.

mr. hsu, do you believe you have a responsibility as a board member to protect the independence and credibility of the fdic as an institution? not the partisan makeup of the fdic? >> independence of the fdic is critical. just as critical is taking actions to protect the employees. >> so resigning now is how you protect the employees of the agency, not after the biden administration to protect its partisan majority. let me ask you this, director mckernan, have you heard from employees at the fdic following the announcement that he would retire later instead of now? >> have i heard from them? >> yes. >> yes. >> what have i told you? are they able to carry out their work without distraction? >> there are a lot of views

about the report, but universally, they are exhausted and distracted. >> are they able to effectively do their jobs? >> there is significant headwind. >> in your opinion, how does the failure of gruenberg to resign today, how does that prevent the fdic for meeting its responsibilities as an independent federal regulator? >> as i said, we need a fresh start sooner rather than later. the report established credibility. it is important to bring in someone with more authority to press change. it is important to have clean hands to deal with legacy issues. >> last month the fdic announced 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 will have a lot of important work to do with distress to banks overexposed to commercial real estate in the high interest rate 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 with this distraction of chairman gruenberg hanging onto power, and can he manage these risks that are coming out is like a freight train? >> the distractions that we does not help. that is why i say we need a fresh start. >> 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 and get morale and recruiting of new examiners. but the job at the fdic over the next couple of years when we have a wave of defaults in commercial real estate at some of these banks overexposed, the fdic has a big job ahead of them. every day that goes on that he is there, it jeopardizes the safety and soundness of our financial system. the fdic needs to be on the ball right now.

i will finish with mr. hsu. on may 15 when he last appeared with mr. gruenberg, you were asked whether you thought the chairman could restore trust and credibility of the fdic. you testified he thought he could and then answered 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 you oversaw with mr. kim know that's director mckernan. do you still believe chairman gruenberg can restore trust and credibility at the fdic? >> 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. >> do you agree or disagree with the findings of the report you oversaw? i agree with all the findings. >> why shouldn't gruenberg step

down immediately. >> by focuses on the action. >> your focus should be on the leadership that caused the problem. he needs to resign now. i yield. >> with that, gentleman from illinois will be recognize. i do want to remind my colleagues that i will do this periodically. under rule 17 members, the president is protected. members will -- in other words, it is about policy and legislation, fine. with that, your recognized. >> thank you. i have to say i concur and look forward to my republican colleagues encouraging their senate colleagues to rapidly confirm replacement for mr. gruenberg. i think i speak for many members of the committee when i say i was appalled by the findings of the report.

it painted a picture of an agency plagued by toxic culture that has allowed inappropriate workplace conduct to persist for far too long without accountability. it is appropriate to bring in the 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. i encourage the biden administration to quickly nominate a new fdic chair, which i understand is underway. and for the senate to confirm that without delay. for my experience as a business owner and as an organization leader, i know the culture starts at the top. many current and former fdic employees bravely shared their stories for this report. it is important that swift action be taken to show them their voices have been heard. the action plan put forward last december and the recommendations in the report are important steps. i encourage future fdic leaders to dutifully implement those recommendations and the other changes that may prove to be

necessary. i would be interested in what timescale we can expect for these changes. i will start with this. acting comptroller hsu, and mr. mckernan, you have experienced the fact that data on misconduct throughout the organization has not been collected regularly or uniformly. my question is, has this been fixed? it has not been regularly provided, apparently, even to directors and senior management. this issue is highlighted in the inspector general evaluation and the report. do you believe this was an impediment to your understanding of the full scope of what has been going on? secondly, is that part 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. >> thank you very much for the question.

it has been highlight a previously. record-keeping challenges at the agency have been an impediment to having the proper culture and 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. needs to be a third-party expert. there needs to be an independent monitor. there needs to be a safe reporting channel for all employees in order to get those foundations, so then the record- keeping can be addressed in due time. all these recommendations have to be implemented in full. we will do that as quickly as possible. >> is there anything in the interim, any improvements that have been made in the record- keeping as at least a memo going out to everyone? do something better than you have been doing so whoever comes into finish cleaning up the situation will say, here is a comprehensive list of everything, every complaint that has been received the last six months or whatever? >> i believe in the agency

action plan there are some plans within that. those the been assigned. there are deadlines. i believe record-keeping is a part of that. >> i concur with that. the only thing i might add here is that, even if we have the most ideal reporting mechanism and record-keeping mechanism in place, it is not going to work if people are afraid of retaliation. that is not policies and procedures training. that is a change in values. that is something that will have to be a cycle that builds. we have to show that through discipline. >> people that are thinking of reporting something will look at whether other people that report them actually get the complaints addressed or whether they are swept under the rug. will be the work of year is to let everyone understand that this 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 all of these are implemented? >> your point about trust is

critical. there is a reason that fdic employees have been skeptical of these efforts in the past. that trust is going to be established through consistent actions over time the show it protects them. in this process that we have established for the hotline, there was skepticism about using the hotline for some time. it took time for employees to come forward and use it and realize, okay, this is different. i can trust this, they can tell their colleagues. the hotline calls, the hotline usage improved over time because people trusted it. we need to do the same. that is why it is so critical we stand up these new structures immediately with urgency. that they are credible and people don't have the fear of retaliation. >> we have to monitor that. >> yes. >> i yield back. >> the gentleman from texas, the skipper of the republican baseball team, we have a big

game tonight, is recognized. >> you are going to do well today. thank you for that introduction. director mckernan , transport made the decision to hire a top to bottom assessment of workplace culture issues at the fdic that same day. the second wall street journal article came out about his chairman gruenberg misconduct, he instead created a special review committee and reported -- appointed you and director hsu as cochairs. director mckernan, did director gruenberg participate in any decisions made in the review committee. >> no. >> why not? >> to support for the independence of the process that it be overseen entirely by independent directors. >> chairman gruenberg was excluded from the special review committee which removes the action plan because he is part of the problem.

through our committee investigation, the cleary report, we have seen bullying and misconduct from the chairman himself. if he wasn't fit to be part of the process for culture changers, -- changes, wouldn't you agree he is not properly leading the action plan and the recommendations? >> i think it is an important point, i have been advocating for the board to take a more active role for these and related considerations. i think there's a question about the right governance of the action plan going forward. >> it is appalling to me that he would even consider attending to be part of the solution when he is part of the problem. mr. kim, one of the cleary recommendations as for the fdic to a leadership accountable. can you talk about why this recommendation is necessary at all for a true cultural change at the agency? >> we have set forth in the report the finding that these workplace conduct and culture issues have been long-standing and persistent. as a result, we believe the

recommendation needed to include transformation of culture and structure beyond just improved trainings or policies. 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 do not take a view as to whether any particular leader or chair should or should not remain at the fdic. that was not in the mandate, nor do we believe we have the authority to make such a decision or recommendation. >> on may 20, chairman gruenberg said he would resign from his role after president biden and the senate have nominated and confirmed his successor . we have been talking about the today. this is unacceptable.

a clear political decision by the biden administration and chairman gruenberg. the report to show the employees of the fdic have zero faith, i repeat, zero, in the current chairman. his decision is insulting to those who his actions have directly affected. director mckernan, how does this hinder the fdic from fizzling its duties, and what particular challenges does this create for the fdic in effectively overseeing and managing financial institutions? >> congressman, the morale at the fdic is bad. that is not good for our ability to execute on the mission. we have great staff that will push forward, but i think also going for longer-term, the state of affairs at the fdic, if not fixed, will be a real

problem for retention and recruitment of new staff. that will be fatal to the ability to achieve our mission if we cannot fix that. >> i am a small business owner. i know if your employees don't have faith in leadership, it is not ever going to work. you have a real issue here. with that, i have a minute to go. mr. chairman, you my time back to you. >> i appreciate that. mr. mckernan, we were starting to explore some of those changes. do you believe, i will asked the same question i asked mr. hsu, do you believe mr. gruenberg is the right man with the right ideas to be able to leave the fdic into a new place? >> as i said, i think we really need a fresh start, sooner rather than later. >> does that mean waiting until tasha feels like saying i am resigning, but i am actually not . it is a little like a member of congress and, well, i'm not going to serve in congress if the people who elect me don't elect me. of course. there is a simple thing this

president could do, which is remove mr. gruenberg . we could start on that fresh start. could we not? >> i take your point but i do think it is ultimately a question for elected leaders. if i am asked, my focus on the best interest of the agency, i think that is clear. >> time has expired. the gentleman from california is recognized for five minutes. >> think you very much. first of all, i want to thank the chair. we did ask for hearing, and he provided one. i want to thank the chair and ranking member so we can ask these questions. i appreciate that very much. at the beginning, mr. speaker, you said, culture starts at the top. i agree with that. culture starts at the top. 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. it says member shall be confined to questions 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. >> i appreciate the upgrade, but it is mr. chairman. i am happy to address that. there was no discussion. >> the reason i say that is because, you know, another member said this is one of the reasons people hate congress, because of the swamp moves. by the way, my dad, a great guy, unfortunately, passed away a few weeks before i joined congress, taught me what they. never defend the indefensible. i will not defend chairman gruenberg, because personally, i think it is indefensible. but i will defend, obviously, the decisions that we are making here. how do you defend others when you're talking about culture starts at the top, and then you say that people hate washington

because we are swampy? it is because we are hypocrites. when you say that culture starts at the top and take a look at who is at the very top, you take a look at convictions you take a look at court cases. then you say, that's fine, we will look away. but this chairman, we are going to hold accountable. i think we ought to hold both accountable. i 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. not my decision . it is the decision of jurors and judges who made the decisions. all that being said, i do think there's a problem here. obviously, and i think the work you have done as attorneys and as board members, i think you have worked hard. we did have, obviously, recommendations made in 2020 that were not fulfilled.

i mean, those recommendations, why do we think this time, because again, we talk about people afraid of retaliation, why do we think it will work this time? mr. kim, i will go to you because you headed the investigation. >> we did find that a number the findings in the 2020 report remains issues. that is partly what led us to the finding that these are issues that have been long-standing and are deep- seated. that is why, based on the findings, we wanted to put in the reports sufficient information so the reader can get a flavor of what it is we heard. we did here on a regular basis the fear of retaliation. >> was your testimony, i believe, that a lot of the people who came forward were women and underrepresented minorities. with that your testimony? >> that's correct. >> what you think that is the case? >> 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. >> the good old boys that was booking about. >> that is what we heard. >> most of it was in the offices away from washington? >> it was both. as we set forth in the report, we received reports from all of the divisions, all the districts , but as we noted in the report, some of the issues with respect to fiefdoms and the like was more prevalent in the field offices that headquarters. >> 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 it is defensible to defend the chairman. i think that the things that were said at the beginning were absolutely true. culture starts at the top. sodas character. i think we need to change. i wish my colleagues on the other side will listen to their own words. thank you very much. i yield back. >> gentleman yields back. gentleman from ohio, chair of the housing and insurance subcommittee, is recognized for five minutes. >> thank you, chairman. thank you to the witnesses. tragedy for, i thank you for the work to highlight these issues. in your opinion, can an effective top to bottom cultural change be made at fdic wall martin gruenberg is chairman? >> i don't think we can have real culture change it to we have the fresh start.

>> it is been my experience, whether in the military or business, frankly, here, that you can update the hr manual and write new standard operating procedures and train them all you want, sometimes you just have to change the people. it seems clear we need to do that. why the delay? why the delay? why should we tolerate gruenberg sticking around for the rest of the afternoon? >> at the board we are not delaying. we have taken steps already to hire an independent third-party expert , independent monitor and to restructure the reporting lines. those raw actions required to reduce the fear of retaliation, to ensure that we have the right outside expertise so we can make the changes necessary. >> you are outsourcing the leadership challenge to some third-party, and you will put a director in to implement what the third-party came up with? >> the purpose of engaging with outside parties is to make sure we have the best expertise. we have to do this differently. >> why not just hire a good leader? >> we have to do this differently than in the past

who want to make sure we have the right plan, and that we are implementing those steps. >> sounds to me like the plan is to come up with the committee designed to delay action while gruenberg writes out the rest of the biden administration and continues his time there. how long has director gruenberg been at the fdic? >> 20 years, as i understand. >> how long is he been leading? >> 10 of the last 13. >> you think he has anything to do with poisoning the culture? >> i think the chairman is ultimately accountable for the culture. >> generally, that is the answer. everything that happens or fails to happen in an organization is ultimately the responsibility of the top leader. it doesn't mean he's the one who did everything, but ultimately, that is the duty of leadership. anyone can find an excuse. it seems like gruenberg is full of them. leaders find a way. director hsu, do you think

gruenberg will find a way? >> i focus on what i can control. >> if you get a good outside third party, outsourced solution, do you think you could follow it with any credibility? >> the purpose of the exide expertise is to make sure the agency is doing the best they can for the employees. >> what is the due date for that? around january 21, 2025? >> it is right now. we have to do these things right now. >> i know we do. but you are outsourcing to some third-party. are they supposed to get back to you january 21? >> the hiring of the third- party, the expert and monitor, is currently in the process right now. we are also going to restructure the broken internal process that is led to retaliation. >> well, it might take until january 21 to get rid of director gruenberg. i'm pretty sure it will be done right around that timeframe , if not before. mr. mckernan , is there anything we can do between now and january 21 to facilitate the departure of director gruenberg at the fdic? >> i don't know that i can speak to that. 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. >> obviously, the president of the united states can fire him. that would be great. no leadership coming from there. the congress has the power of the purse. i mean, we're only funded until september 30. in theory, we could eliminate funding for director gruenberg's position beginning october 1 of this year. we have an opportunity coming up in the appropriations process. we have a rule that would facilitate just such an action directed at gruenberg. does anyone believe that would be appropriate to provide congressional accountability for director gruenberg? do you think we should keep in the place or do you think we should continue to pay director gruenberg? we are the ones who vote provide the funding. should be keep him on the united states payroll? i was really encouraged to hear talk about not defending the indefensible. but if we find his paycheck into the next fiscal year, we are defending

the indefensible. we should not provided time to director gruenberg. i hope my colleagues will defund his payroll. i hope it is a moot point because joe biden could fire him this afternoon. that would be the appropriate action. anyone doing these kinds of things anywhere else would be walks out with a cardboard box that afternoon. 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 that make up the chain of command. we need to fix this culture. congress can do that by holding gruenberg accountable with appropriations. i yield back. >> the gentlewoman from texas is recognized for five minutes. >> thank you so much. thank you to the witnesses for being here. first, i want to start with -- i am so far away from you, i can't read your name. >> ms. mainoo. >> my eyes are not as good as when i said up front. 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. then he went further and said that this was a long-standing and deeply ingrained. if it goes back to the '80s, have you been able to age any of the 500 complaints? like how many were in the '80s, '90s, so we can get a better idea of how ingrained it is? >> to give a better idea of our findings, we included in the report what we thought was necessary to understand our findings and supporter recommendations. >> did you age the findings? let me ask you this. was there more prior to 2000? was there more in the '80s?

>> in the representative examples, the nearly 50 representative examples were included in the report, we had dates. >> i know a lot of the samples, a lot of pages are like this. they are redacted. okay, there are redactions and probably 10 pages. is says examples on page 84, but i have two pages of redactions. >> right. what i was saying? >> simple question. did you age the allegations? it really is yes or no. >> we aged allegations. most of the examples in the appendix you were referring to with dates are from within the past five years. >> okay. that is good to know. it struck me that the oig report did make a recommendation

regarding this back in 2020, suggesting the fdic develop a more formalized strategy to promote harassment free workplace. in response, the agency wrote, and again, this is 2020, the fdic disagrees that developing new strategies is required because the fdic currently has a robust, multifaceted strategy in place designed to promote a culture of inclusivity and 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? >> the chair in 2020 was chair mcwilliams. >> right. that was not mr. gruenberg. >> correct. >> when he came in, mcwilliams,

he saw the oig report and said, we disagree, we are doing fine. we don't need a new strategy. that kind of caught my attention because there seems to be so much focus, and well it should be, on the current chairman, when in fact, there has been other previous germans, 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. tran34, you been on for how many years? >> about a year and a half. >> i know you have said even today that the board bears responsibility and that the board should be more involved. in your 1 1/2 years, what have

you initiated to take care of some of these issues that you, yourself, say we need to take steps to address these problems? what steps have you taken? >> when the reports came out in the press in november, i had been there about 10 months. 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. a very limited budget. it was not a real review. is not a top to bottom review. i found that very objectionable. i worked very hard on the board to get us to do a real review, independent review. director hsu was very constructive to that end, now we are here today talking about that review. >> anything else you have done that you can share with us ? >> are currently having a relatively contentious debate on the board about exactly what the role of the board is going forward. i am one among five. i think we need to reconsider how the board approaches the oversight of the action plan.

>> i have unanimous consent. >> without objection. >> unanimous consent to enter into the record an article from the bloomberg. biden is poised goldsmith romer to lead overhaul at fdic. >> without objection. >> thank you. >> the gentleman from west virginia is now recognized for five minutes. >> here 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. most of them were of the view that no banks would have been given that exception in west virginia. my question is directed at mr. hsu and mr. mckernan about silicon valley bank. it was a comparatively smaller financial institution. many policymakers and politicians were skeptical about invoking the systemic risk exception for silicon

valley bank, while others, particularly those with large ties and interest in the silicon valley, supported making the banks account holders complete the whole. would you say it is true that the silicon valley bank was not an obvious candidate for systemic risk exception? >> the board, the fdic board, decided unanimously to invoke the systemic risk exception at that time based on a lot of analyses and discussion. >> okay. >> i would agree, congressman, it was not an obvious candidate. that was one of the harder decisions i have had to make my life. candidly, i would not begrudge anyone who wanted to criticize me for it. i sometimes wonder if i made the right decision. i appreciate that. i know you do the best implement the laws. a lot of gray areas in that. let me ask a follow-up bishopric is it also true as part of the analysis regarding the invocation of the systemic risk exception for silicon valley bank that an important concern relate to the fdic was

that it would be important to prevent money for going to chinese interest? what did the fdic do to analyze whether the fdic would be funding chinese interests and how the fdic go about preventing that? >> congressman, i can't speak to that. i would be happy to take that question back. that was really not something i was looking in at the board. at the time, what was central to my decision-making, we also had signature the same weekend. although it was not obvious to others at the time, first republic was right there as well. i put the three together, that was really what got me to a yes. >> okay. any thoughts on that? but i would have to get back to you. >> all right. i have also been alerted to the fact that the fdic chose to ensure -- insure certain foreign accounts for a for that for a certain bank would be in violation of, 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, fdic chose to drop the cycle and payout the account as if the money was stationary in the united states. why did the fdic bend the rules on that? >> caucusing, that is another question i will have to take back. >> okay. i have time for one more question. changing back to the earlier discussion. if mr. gruenberg were to step down in the current vice- chairman becomes the acting chairman , with the fdic continue to function and carry out its mission? >> absolutely. the fdic's has functioned without a full board for quite some time. >> anybody else? well, let's just say the bylaws clearly state there is a solution in place. if mr. gruenberg were to step down and resigned today, he is already told us that they need to prepare for him to stay through the end of the year. the staff went through, went from hoping for a fresh start

to now being stressed about their future of the agency. defeated and unable to accurately do their jobs. that would be a good option, i would say. mr. chairman, that is it for my questions. i yield back the balance of my time. >> gentleman yields back to the gentlewoman from massachusetts is now recognized for five minutes. >> thank you, mr. chairman think you all for being here. first i want to say that i am encouraged to see a more representative table today. i'm glad there's a woman at the table and diverse representation at this table given the experiences both of racial discrimination, microaggression, hostilities and also sexual harassment but i remain deeply concerned about accountability and records following the inaction to address essential workers rights at the fdic. i did not parse words when mr. gruenberg was before the committee, and i certainly won't today. i appreciate that he has taken the appropriate steps 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 got critical federal regulatory work and are going after it. that aside, let me be clear, the fdic must prioritize records for workers and accountability for wrongdoers. mr. kim, based on this report, it is not clear to me who at the fdic directly contributed to the recommendations section. >> sorry, who directly contributed to the recommendations section? >> yes. >> the report was entirely the work of the tran19. we both reached our factual findings and analyses and developed the recommendations. >> let me unpack that. i will be 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? >> thank you for the clarification. of course, all of our, the entirety of our report are based on facts 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 in our remarks today to emphasize the emotion we heard from people who were reporting. the entirety of the findings and recommendations are based on what we learned from the fdic. in terms of the recommendations, there were many people within the fdic, particularly those 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 them, those who

experienced those issues in part of the process, asked them how they think this could be improved. >> i have some other questions i need to get to but that is so critically important. it is essential to healing for those adversely impact did. i am a firm believer that those closest to the pain should closest to the power driving in the lessee making. that's certainly true for survivors justice. i hope they continue to be a fully engaged and that their input is solicited. that's so important, partnering with them because they are experts in addressing sexual harassment and protecting workers rights. the report states that the fdic did not conform with two recommendations on consistent disciplinary action for some initiated harassment what were two recommendations and why did the f's -- fdic oppose them?

>> the report in 2020 that the fdic -- >> we are running out of time. did you just tell me? >> we don't know on what basis the fdic resisted those. >> no one, and i repeat no one should be subjected to sexual harassment in the work base. this issue affects people of all walks of life and workplaces throughout america which is why i will be introducing that be heard in the workplace act. and i said harassment -- and i harassment, survivor focused legislation to prevent discrimination and enable those to seek justice. drafted in partnership with survivors, civil rights lawyers and advocates. arbitration and nondisclosure agreements prevented from covering harassment. expands jurisdiction of the equal opportunity commission. and a clear pathway for

survivors to seek legal redress to the court system. it 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 care about your lives. every worker should be able to do their job with safety, dignity and respect. thank you. >> the gentlewoman field back. the gentleman from tennessee, mr. rose, recognized for five minutes. >> thank you for the hearing and thank you to our witnesses for being with us today. direct or, as the founder and operator of a business, i know how important values are as a guiding beacon to employees. the fdic, you have the stated values of integrity, competence, teamwork, effectiveness, accountability and fairness. i'm sure your nodding to

indicate you are aware of that. director hsu , the fdic describes the value of integrity as adhering to the highest professional standards. based on the definition of integrity, does chair gruenberg yelling at his staff meet the standard of integrity? yes or no? >> any misconduct does not meet that standard >> i think you're right. the fdic describes teamwork as collaborating and valuing with one another. based on this definition, and being afraid, the staff being afraid to give him bad news, does it sound like amy the value of teamwork? >> it appears not. >> 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 have trust in that chair to write to him with concerns like they did with cher baer or mc williams, indicate that he meets the value, yes or no. >> trust is critical. we need to work extremely hard to rebuild trust with staff with the fdic. >> let's be honest, chair greenberg does not embody the values of the fdic. employees are working in fear at the agent he and as we seek. i grew up on a farm. early in my life i learned from my grandmother that when the fox is in the henhouse, you have to get it out. you don't leave it there for months and months and expect it not to suffer continual damage. so while i appreciate chair greenberg's decision to resign, frankly it needs to happen now. and having it happen months from now puts the country and

certainly the dictation of the fdic at risk. direct mckernan, as you consider the values of integrity , competence, teamwork, accountability and fairness that are supposed to guide the girl deposit insurance corporation, did your review of their ward and personal looks france at the fdic find a culture active of those values? >> you cannot read the board and think that the culture is consistent with our values >> the report outlines that employees do not have trust and reporting process. even though the fdic has over five offices for employees to take their reports. what were you hearing from employees that drew you to that conclusion? >> we were hearing both that there was confusion in the reporting processes, that there were a number of things that they could report, but not a

uniform understanding of which channel was for what. then there was concern expressed to us that some of the reviews following reports conducted by groups that had management interest more in mind than the credibility questions about those reviews. >> i cannot help but hear whatever from each of you today and not reflect back to january 20th, 2021. when president biden said that everyone is entitled to be treated with decency and dignity. i agree with the president. that's true. he went on to say that you treated another colleague with disrespect, talked down to someone. i promise you i will hire you on the spot right on the spot. know if sore but. it sounds to me like that

admonition is not been taken to heart with respect to chair greenberg. i would suggest that chair greenberg reflect on that and i hope the administration will reflect on my. i trust my colleagues on the other side understands the clarity at least in the words of president biden. and i think it is time for that clarity to be implemented. with that, i yield. >> the gentlewoman from michigan, now recognized for five minutes. >> thank you, mr. chair. i can you address a problem that you cannot seek? one long-standing issue, colleagues have brought it up documented in the 2020 record general ward. the lack of centralized

database. tracking harassment claims and investigations of the f eic. the internal records were maintained in like a hard copy files is held by specific individuals there and stored you elect chronically. fdic is what they call her. human resources information system. so from 2008 the 2021, the system documented only two cases from 2008 the 2021. the documented only two cases of sexual harassment and just seven cases of harassed men. mr. kim and miss mainoo, given that in 2009, and office of the general inspector survey found 8% of respondents had experienced sexual harassment from 2015 to 2019, is there any reason to believe that the

database records from 2008 to 2021 were complete or accurate? >> there is no reason to believe that the database was complete. >> in terms of tracking workplace misconduct, how would you care to rise the fdic's data collection and management practices for both of you? >> currently? >> yes. >> we understand that the group within the human resources division at the fdic, within the administration, has taken steps more recently to improve centralized and systematic record keeping. in the past year -- >> just based on the action plan. >> no, this predates the action plan. we understand that in the past year the group specifically has introduced a system that now tracks different types of interpersonal misconduct so it

allows the fdic to identify sexual harassed, for example, compared to a hostile work environment. this identifies whether misconduct falls under the anti- harassment program, which the records before did not do. so -- and i'm not rolling my eyes at you. it just very bizarre. so the fdic december 2023 action plan, one of the stated goals was to enhance the centralized tracking system for monitoring sexual harassed claims. the projected completion and -- completion is february 29th this year. so either of you, has the action items successfully been completed? what steps were taken to improve the fdic's ability to track misconduct? >> i cannot believe it until i see some independent validation

completed. >> i agree that the completion of the action plan for that particular database will only work if people feel safe. >> no trust. >> yeah, makes sense. >> that's the fundamental commitment to be addressed. >> i talked to him about that. people have lost a lot of trust read staying on topic and tracking information, the 2021 were found that there is no systematic process for collecting or analyzing employee retention data for and since. the fdic revised their tracking process in 2023. so what is the current process tracking retention records, employee retention records, does anybody know? >> my understanding is that there are projects to improve these. as board members, our focus is we really need to change both structures he looks this >> i know when people start leaving, something is wrong. you know how you know. i'm trying to figure out what percentage of employees

completing surveys. what are we doing? that can always help with indicating whether or not there is a pattern of sexual harassed and. getting to the root cause of turnover. we're talking about retention and how important exit interviews are. >> i believe that's identified in the report is something that needs to be improved. in concert with these other steps. >> they're doing exit interviews right now. you don't do exit interviews right now? >> i don't want to miss week. >> that's really them or. this usually in such a large organization right now. >> the gentlewoman yield back. i recognize myself for five minutes. thank you to our witnesses for being here today. the report on the workplace, culture and conduct of chairman

gruenberg are disturbing. the report makes a number of recommendations for the teacher about the ice tea. number one, calls for access to the chairperson. the recommendation ensures that the mental health resources developed as a result of the recommendations would have an audience with the chair and other negatives in order to make those cultural changes. chairman gruenberg is not just a symptom of the altar. he has become so ingrained in the culture that it is and just washable from his personal leadership. you cannot shake up the order of things when you are the ultimate tumble of the old regime. number two, a recommendation calls for a 300 60 review of all leadership to ensure accountability. let's look at his history to get a sense of how he might receive construct of feedback resulting from this review. in a report for one executive stated that his actions have the effect of filling open conversations. another said that there is,

quote emma a great reluctance to deliver bad news to marty gruenberg. november 2020, when overseeing a bank acquisition, officers of the inquiring bank did not wear masks to the meeting because the state where the meeting took lace did not have the mask mandate at the time. the chairman quote unquote lost it when here they did not wear a mask and took his rage out on his own. one employee was the target of this behavior and said him and i wrote, i might try, i want to quit.". finally when confronted with the fallout of unacceptable conduct, he refused to believe descriptions of his own behavior prompting one executive to leave the room and outrage. even this pattern of behavior, can we really expect the chairman to faithfully implement these cultural changes asked 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 on more the prospect of a quick senate confirmation process. we all know the senate does not like to move likely and i would expect nothing different in this case. chairman gruenberg has vowed to remain at his post and told employees to prepare for him to stay to the end of the year someone who has served as acting chairman three times over the horse of his career. a large chunk of his career spent with interim titles. he is still the fdic because of his refusal to leave at the end of his last chairmanship. director hsu my how do you feel that correct gruenberg is the correct person to implement the changes directed in this report in the long term? >> thanks for the question. i'm focused on what i can control. i can control the actions of the board. >> i mask and youth your opinion. do you think he is the correct person? >> i'm focused on what i can

control. focused on trying to get in place -- >> you are not responding to my western. let's go to my next question. are you comfortable with gruenberg staying in his post on an interim basis? >> i'm focused on the actions. >> are you comfortable him as long as he is -- >> if he delivers on commitments to take action, that is what is really critical. i will work with whoever the chair is but that is really important to focus on the actions. >> as we both know, the senate confirmation process can take a long time. all the while, employees are being asked to wait for leadership required to make this cultural transformation. how long do you think they have to wait? >> they're not going to wait. we're going to take action immediately. >> so you're confident that he can do this, that mr. gruenberg can do this ? you said we don't have to wait. he is still there. >> we are taking action. >> does that mean you are comfortable with him doing this job like >> i can control what i can

control we are taking the monitor and so there is no fear of retaliation. those are the things i'm focused on. >> thousands of laser banking on this change. we have the same person at the top that has not demonstrated a willingness to tackle the problem here can fact, people are afraid to go to him and even talk about it. so i expressed a lack of confidence that i have is a member of this committee in seeing things change. with that i'm a thing you, i yield back for the gentleman from wisconsin who is also the chair of the house administration committee is now recognized for five minutes. >> thank you very much, mr. chairman. mr. hsu, after the wall street journal published the reports in november, gruenberg announced he had hired someone to conduct a third rd review york a week later, the board of directors established a special review committee to oversee a third party review. why did the board believe it was necessary to read a special

committee and higher and out law firm to conduct the review? >> the board unanimously voted to create the special review committee to ensure there is independent in credibility. >> would there be concern of a lack of credibility or independence if the review would have been select did by mr. gruenberg? >> i think that is implied within that assumption, yes. >> so let me jump to you if i can. from my understanding, they are already investigating the fdic as was just discussed. his decision was it to scrap that investigation? >> the special review committee made the decision. >> so it is not the full fdic board? >> correct. >> can you say why they were chosen instead? >> we had to have an

independent review. a chairman driven or staff driven review. you cannot investigate yourself. also when you look at the terms of banker engagement reasonable westerns are narrow in scope. it was limited in budget. part of the reason we made a strong case for a separate committee to leave the investigation. >> thank you very much. thank you, mr. hsu. there is a long history of incidents with gruenberg's temper predating the wall street journal reports. were you aware of the investigation in 2008 into his behavior before the wall street journal articles appeared? >> no. >> you are not formally aware or you had no knowledge that any review had been conducted? >> i was unaware, either formally or informally. >> so there was no casual conversation in the work lace, around the water or that the review might be ongoing. >> i was not aware.

>> if i could come back to you, were you aware x >> was i aware of the 2008 investigation? yeah, i heard rumors about it. >> so you heard rumors and needed full evidence. walk through what that looks like to you? >> how did i know what i knew then? >> was a casual conversation? we could have a question -- discussion about the independence of the law firm. was this just water or talk? >> there's a lot of open secret in d.c., as you know. this was one of them. in 2008, also the investigation. >> would you say it was widely known at the fdic the? >> i can't say. i don't know. >> where would you have thought this would have been a casual conversation the two individuals might have had? >> i was a senate to at the time and i think folks knew

then. >> so senate staffers were involved. the broader banking committee had general knowledge that this was ongoing >> i was beaking to the investigation. >> so the investigation was ongoing? >> no, i'm sorry, that there had been an investigation. >> not about the baker review? >> that came out from the wall street reporting. >> this is good that we are diving into it. so you did not acknowledge the report was ongoing until you read about it in the wall street journal? >> where i learned about the baker -- i think it was in hearings immediately after the wall street journal report your >> it was not part of a casual conversation you had. >> problems with the fdic. that was i think reasonably well known and it has now been fully exposed to the level that it was. but the baker review, you are unaware of, which is a problem because the board is supposed to act on major matters.

in it, the chairman retains an investigation which would have attracted a lot of publicity. >> thank you. in my limited time, i think it's so important to say that chairman trends and should resign. he should have never been involved in the initial review with the third party for the exact reasons identified today. he is noted as saying he has no if's and's or but about whether or not someone engaged in this action should be terminated. he should be terminated. she engaged in the action. to me it is pretty rare what is going on. the administration is concerned about the policies and they're willing to put their agenda ahead of protecting people. i yield back. >> the gentleman from west johnson yield back. mr. muse are is now recognized for five minutes. >> thank you, mr. chairman. so, who has been fired or put on leave at the fdic or separated from employees that

they allegedly have been abusing and harassing? >> my understanding is that there have been for individuals who have been separated from the agency. >> and you support that? >> i was not directly involved. >> and what they did apparently was more serious than any accountability of mr. gruenberg in your review ? >> i don't think i can talk about the specifics around that. >> why not? you are at the testimony? >> there are protections around privacy. >> you are doing a lot of protect them. a lot of protecting. it's not loyalty. it struck to the fdic. you are missing the picture in my view, sir. missing the picture did see you informed representative makes that you feel that he could

restore trust and credibility at the fdic. he said yes, you do, see you condone how he has handled things that the fdic and you think is the right person, the only person that can correct the situation that was created under his leadership. does that make any sense to you? >> i understand your question. i do not down any actions. my focus is on actions that restore trust with employees of the fdic >> you keep saying action. what about the in action? the in action of many of the supervisors there who should all be carefully reviewed. it sounds like a madhouse taking place here. >> currently there are three critical actions that are being can entered, supported and considered by the board. the hiring of the expert the hiring of the monitor, setting up a new structure so there is no fear of retaliation. those are all things with full board engagement. >> it sounds like one heck of a

bureaucratic committee reviewing this which can apparently take months, meanwhile leaving mr. gruenberg there and weaving employees in a state of malfunction and dysfunction and disarray. when did you first learn of the chaos taking place? >> we read it in the wall street journal article. >> it the first time you had heard of it? were you surprised? >> i was very bothered by it, yes. >> what was the first time you heard? you said you heard rumors years back? >> to be specific year, i heard maybe in september or august that the journal was working into -- looking into workplace culture issues? >> we surprised to hear? >> i did not hear much about what they were going to report so i was deeply shocked when i

actually saw the story. >> all right emma so everybody was shocked, surprised him adjust read about it in the paper. yet much involvement do you have on a daily or monthly basis with the fdic? >> we have monthly board meetings -- meetings in between. >> hr ever in those meetings? >> 6000 employees. the reason for the board to pay attention to the issues that their 6000 employees have? >> we need to take care of the employees. >> let me ask you about the divisions within your agency that you oversee your care if one of your division directors -- if this was occurring within their division, how would you handle that with that division direct? >> misconduct --

>> same way, would you leave them there? so you know what, i know this has been a for years. women have been harassed. men have been harassed. all kinds of abuse taking place. lawsuits. you name it. it's bad. but i'm going to keep you there because i want you now to fix the mess that you made. that's what you're doing with mr. gruenberg. >> wrongdoers must be held accountable. >> how is this any different >> it was not cited as the cause of the problems we see in the report. their recommendations to layout the actions >> he needs to be the root cause? so you need to find out if he was part of the root cause. you agree with that? you think that good management lacks >> as i said, i think we really need a fresh start. the sooner the better. >> the sooner the better. why not today? >> the gentleman from pennsylvania yields back. the gentleman from wisconsin,

mr. fitzgerald is now recognized for five minutes. >> thank you, chairman. i apologize that we have judiciary going on at the same time. we are all appalled by the findings of the report of the talk the culture of the fdic the last you're discovering ceo roger rothschild berkeley designed. similarly in march, community bank ceo step down following the collapse. to the commissioner, do you agree that a responsible regulator would not be doing its job if it let a bank ceo stick around for similar conduct that was reported in the investigation? >> hypotheticals are always dangerous but it's hard to imagine the bank regulator

letting the management stick around. >> thank you. send question to you. what a responsible regulator allow aco to around until it imminent replacement is found despite the misconduct that happens on their watch? >> they would take the steps necessary to ensure the safety of employees. >> i would like to discuss the recommendation of the 360 review of the chairperson reports. can you briefly describe the 360 review? >> yes. we believe that it will be important for the leadership to have 360 review to be informed of the views and perspective both of the people to whom they report that also those who report to them. >> miss mainoo, could you answer the same question? >> yes.

to add to what mr. kim said, we heard when we spoke to fdic employees as well as reviewing records of recommendations that employee resource groups have made in the past, that there is interest by fdic employees in 360 degree reviews, so we included that is one of our recommendations >> the recommendation states that the review should occur for at least the first two years by independent third- party, correct? >> that's correct. >> you think it 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 separate third-party from the culture change role? >> as we said not work, the independent third that he may or may not be the same. >> so the cleary report highlighted the misconduct in these findings. you think the team would still have this recommendation if

they had not found misconduct perpetuated by the chairman? >> i believe we saw value in 360 reviews regardless of who is the chairman. would have recommended a similar review. >> because of the highlighted misconduct of the current chairman, do you think the information obtained by 360 review should be submitted to congress to assist on our oversight efforts of the culture change? >> our view was that it should be conducted by an independent party so they're not worried about concerns or fear that management will hear about it. i don't think we recommended that a the made public or divided to congress. i do think there are some questions about how open someone will be in there reviews if they know it's going to be provided public they. so that is not part of our recommendation to congress. >> thank you, chairman. i yield back. >> gentlemen yields back. the gentleman from california, mrs. kim, now recognized for

five minutes. >> thank you. thank you for being here with us. mr. hsu, in a joint statement issued by you and direct from a common to announce the release of the report, you say it but the people of the fdic first and focuses on identifying root causes. he also noted that it was balanced, focused and nonpartisan report. do you still stand by the statement and sentiment that the very report that the people of the fdic first? >> yes. >> you do. do you agree with the assessment that the chairman's attributes hindered his ability to establish trust and confidence and meaningful culture change at the fdic. based on your statement regarding that report, the leadership in order to put the people of the fdic first took >> i agree with the conclusions

that the actions present unique challenges to building trust with staff which is why am very focused on actions >> do you still support the chairman? >> and focused on what i can control. what i can control is influencing the board to take actions that are necessary to reestablish trust with staff. that's what my focus is. >> okay. one of the recommendations in the ward was for the victims of abuse and harassment to have access to chairman of the fdic. as it stands today, unfortunately, this seems to be counterintuitive for those that comes. former chairman williams for example, spent a lot of time with staff in cafeteria and rode the bus from virginia square to the other off says, while the chairman and his time with only his small circle of trusted advisors. so let me ask you a question.

based on your investigation, do staff believe that chairman gruenberg is an accessible chairman? >> i don't think we posed the question in that way, whether he is accessible. what we learned, we put it in the report, which is although many employees had lost the relationships with him there were a certain number, including direct reports with interactions with him. then general -- >> the question is as chairman, should not just surround himself with top executives, senior members only but should be accessible to all employees regardless of there's data. that is the accessibility question. >> accessibility is obviously a good thing and being more accessible obviously helps and improves work as culture. >> let me ask the question to

you, mr. mckernan. if chairman gruenberg does open his door to victims of harassment, do you think the findings about his behavior towards staff would make employees hesitant to approach the chairman direct way? >> i think given the reputation as documented in the report, i suspect that would be challenging for some. >> can you answer the same question to ask why do you think it is important that the chairman is accessible to his employees regardless of their status, rank, position? >> one of the things i've certainly learned in we are seeing and invest ignition is that you are not, as a leader i'm a rely simply on the formal channels. they break down. you have to have a real deep- seated interest in trying to root out information. that requires the open report

with the staff. >> be clear, it is a great recommendation. the fdic has a pervasive toxic culture. because of that, employees should have a direct line to the chairman to report those issues. however with gruenberg at the helm, i'm not sure if employees benefit them direct this to him or even want to have him available to them for that matter. in the report, it's recommended that the fdic hire an independent third-party to advise and assist with implementation of the recommendations. but i'm concerned that the leader of the officemate a sense of loyalty the to chairman gruenberg. so director mckernan, would it have been valuable for members of the committee or ward members to be involved in the decision for setting up the office? >> yes. this is a topic of some debate

now. this monitor is a critical choice for us. i originally learned about the process when the chairman announced the hearing. >> your time is expired. >> thank you. >> the gentleman from new york, mr. lawler, now recognized for five minutes. >> thank you, mr. chairman. democrats say that chairman gruenberg was not aware of the deep-seated cultural issues at the fdic until it was revealed by public reporting. when chairman williams took over at the fdic he, he immediately saw the cultural issues that were prevalent at the agent he. chairman mcwilliams came to the fdic with a goal of knowing the issues faced by employees and took time to read the shuttle to the arlington and d.c. campuses, eat lunch in the cafeteria, had an open door policy to hear employee concerns. through outreach to employees,

chairman mcwilliams noted that the toxic culture was readily apparent and should begin initiatives to improve the agency. in the first three months of her tenure, chairman mcwilliams received a letter from pomona's african-american employees outlining his areas of discriminatory act that the fdic the. chairman mcwilliams worked with the employee resource groups and her staff to form the employee driven initiatives to fix the issues highlighted in the letter. and so, when i look at the 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

chairman. mr. kim and miss mainoo, as your investigation did you review prior work as culture at the fdic, other than chairman gruenberg? >> as we set forth, we received reports from people who had suffered experiences going back many years, so our finding was that did include information in reports during times that covered prior chairs, as well. >> and did you hear from any and weighs about a different is between the leadership of prior chairs and chairman gruenberg's leadership ? >> our focus was on the reports of incidents experienced, and their experiences with backed to the workplace culture. as we note in the report, their experiences with respect to work as culture, we found, were

long-standing and deeply ingrained, i believe was the word used. that led us to a number of the recommendations as well as the findings. we found in terms of the work as culture issues that it was something long-standing and not attributed to a particular chair. >> okay. in your review do you recall employees reporting counters with chairman bear or mcwilliams were the employee described those chairman as being unprofessional, aggressive or hostile acts >> we were not focused on -- >> yes or no? do you recall anyone in your review? >> we do not recall anyone using those words. >> anyone say that they were disrespected, disparaged or treated unfairly by those chairman, yes or no? >> not in the context of hotline reports. in the context of discussing

experiences with prior chairs, there were some who had noted that the former chairman sheila bair that at times difficult as well. >> director, yes or no amount should chairman gruenberg step down immediately went >> i think that is a decision for elected leaders that i say we need a fresh start area the sooner the better. >> so yes lex >> we need a fresh start, sooner than later. >> i will take that as a yes. a shifting gears. is 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 u.s. banks at the time. because of its comparatively small size, do you understand that many of us in capitol hill have told him to weston why this exception was invoked for silicon valley bank? many businesses in the tech industry had their money on deposit at the look on valley

bank, correct? correct? >> yes, yes. >> and you understand that in most instances, there deposit accounts fell in a massive 200 $10,000. >> that is my understanding. >> those politically connected companies would have lost lots of money without this, correct? >> the gentleman's time is expired. the gentleman from iowa is now recognized for five minutes. >> thank you. i would like to yield, the college from new york, the time required to finish his question. >> do you believe those politically connected companies would have lost a lot of money without the systemic risk exception, correct? a for the systemic risk exception. because in prior testimony, there was a lot going on at

that time affecting that decision. >> okay, one that systemic exception was invoked, they said everyone's money would be safe and insured, correct? >> the board decided unanimously to invoke this. >> okay. you are aware that the depositors base include people from outside america in that insignificant chinese interest, correct? >> the purpose of invoking this is to ensure financial stability of the united states is project did. protected. >> did companies with significant chinese interest benefit from this decision? >> the decision to invoke the systemic risk exception focuses on protecting's financial stability and the united dates. >> are you aware policies or direct lives in the fdic regarding the treatment of chinese depositors at the look on valley bank?

>> the gentleman from iowa recognized for 3:27. >>, disappointed that the chairman chose not to be with us today. the government report of the fdic's work as culture concerning, to quote the 200 page report, the fdic remains a good old boys club, rife with sexual harassment, just rumination and other inappropriate misconduct at other descriptions of the agency include a particular insular hierarchy, risk diverse culture and widespread fear of retaliation among the work force including the last seven years alone, 92 harassed come late made. sera resulted in any removal or reduction of pay or disciplinary action more severe than a suspension, something endemic in washington, d.c. adding to the disturbing culture of abuse is the 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 his lambs were made. one of the most frustrating parts here is how can anyone trust him when the wall street journal found this after interviewing just a few individuals or its i want to speak directly to you, director mckernan. your resignation of examiners and training highly critical to our nation's economy doubled from 2001 until it hit a new high of six the two in the first nine months of 2022. only 48% of examiners hired in the agency were made's 2017. do you believe in the ability of the fdic to retain talent, affecting the ability to regulate banks in iowa? >> there is some risk. >> i agree. how does the ability to retain quality staff impact the ability to release, support and regulate banks of people have all of the job? >> it's a pressing question. if we cannot get staff retention, this will continue

to be a challenge. >> you know if the fdic has fired employees in the wake of these reports? >> there have been four separations here cut my understanding that three of the four were resignations or retirements. >> do you believe, director mckernan, that the chairman should have been the first person fired on this list? >> that's a question reserved for our elect leaders. but for what is best for the agency, it's clear to me that we see a fresh start sooner than later. >> i think the entire country is looking for dependable leadership that has really failed and they are asking for his resignation. you should listen to the country. so with that, hsu, you've read the wall street article report titled strip clubs, lewd photos, floozy hotels. the toxic atmosphere at the bank regulators fdic that was published a year ago. i'm glad to hear that i have an extra copy here if you've not

read it. is this an accepted part of the culture that you were part of? >> is totally unacceptable. >> i would agree with that. it is not just normal, correct? >> totally unacceptable. >> finally, they advised just smile and make your supervisor feel good as reported in this. >> all the behaviors highlighted in the article are totally unacceptable. the root cause of that, there is a culture and a structure which need to be transformed. >> i concur. 20 women quit. we have understaffed regulation. >> the gentleman's time has expired. >> thank you, mr. chair. >> i would like to thank all of our witnesses for their testimony today. without objection, all members of five legislative days to admit written questions to the chair. they will be forwarded to the witnesses for response. i ask you to respond no later than august 1st, 2024. this hearing is adjourned.

>> and we have more live coverage, and appear on c-span 3. amstrad -- amtrak ceo and board chair will testify in passenger rail safety and oversight for the house transportation and infrastructure sub committee. it begins at 2:00 p.m. eastern.

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