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How Harassment Scandals Are Eroding Ethics and Trust Within the FDIC

Harassment Scandals are Compromising Ethics at FDIC: Discover the role of Reflect AI in identifying unethical language and building a culture of integrity

The first chapter was bad enough. The second borders on outrageous. 

Three months ago, an explosive Wall Street Journal story uncovered sexual harassment and misogyny at the Federal Deposit Insurance Corporation (FDIC) that was so rampant it was leading female regulators to quit their jobs.

Now, the FDIC is in the spotlight again. The oversight agency was founded to sustain public trust in the banking system, but its employees can’t even trust their own human resources officials. The latest Journal exposé reveals that the people who are supposed to protect FDIC employees from sexual harassment are allegedly engaging in harassment themselves. 

During the past six years, a dozen managers or more have been the subject of employee complaints in the human resource department and the Office of Minority and Women Inclusion, or OMWI, and seven of the complaints resulted in settlements — some of them financial, including one that cost the FDIC $100,000, the Journal reported.

Among the allegations: a female HR manager showed a coworker a photo of a man who was nude from the waist down; a male supervisor sexually harassed a male employee and, during a business trip, invited him to a sex shop; and a senior male employee showed his erection through his clothing to a lower-ranking female coworker. In another instance, four employees accused a manager of harassment and demeaning comments, including: “You have been in this country long enough, you should adapt to the way our country runs.” 

Few if any of the alleged perpetrators were fired; more often, they were moved to different positions within the FDIC. In the case of the sex shop visit, the employee reached a settlement, but investigators said there was “insufficient evidence of misconduct to take disciplinary action,” the Journal reported. In the case of the erection, the female temporary employee’s claim could not be substantiated and her contract was not renewed (but only after she was asked if she wore a wedding ring or kept a photo of her husband in her cubicle), the Journal reported.


Amid these revelations, an attorney who spent the past decade at the FDIC, most recently serving in the Office of the General Counsel, pleaded guilty last month to conspiring to sexually exploit children in a case in which he convinced prepubescent girls to livestream themselves engaging in sexually explicit conduct. This admission compounds the agency's woes and casts a shadow over the ethical standards expected within such a pivotal institution.

After all, senior employees and executives help to set a tone and a culture of conduct and respect in the workplace. The events at the FDIC suggest a workplace that is spiraling out of control.

“It undermines confidence in that entire function, especially if you are looking for help resolving conflicts from a group that can’t solve their own,” human resources expert Peter Cappelli, a business professor at the Wharton School at the University of Pennsylvania, told the Journal.  

Creating a workplace that swiftly and consistently protects against discriminatory speech and actions is both morally and financially essential. Companies must adopt initiatives that reduce risks, protect employees, and safeguard their financial interests.

When it comes to email, Reflect AI plays a vital role by alerting users in real-time to communication that is unethical, unlawful, harmful, and respectful. Preemptively identifying problematic communication can nip it in the bud, rather than letting it fester into a toxic culture that not only harms individuals but also corrodes the integrity of an organization.

Below is the response you’d get from Reflect AI if you typed what an FDIC HR manager allegedly said to an employee:

“You have been in this country long enough, you should adapt to the way our country runs.” 

Carolyne Zinko is the editorial director and AI editor at Alphy.

Reflect AI by Alphy is an AI communication compliance solution that detects and flags language that is harmful, unlawful, and unethical in digital communication. Alphy was founded to reduce the risk of litigation from harmful and discriminatory communication while helping employees communicate more effectively.


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