Background Checks

Welcome to Washington, Where Background Checks Miss All Kinds of Red Flags

Martin Gruenberg has announced he will resign once a successor is confirmed, after reports of a toxic workplace culture at the FDIC.

By VICTORIA GUIDA

How much should presidents and senators consider a person’s management qualities before putting them in charge of an agency?

I don’t know the exact answer. But one I would suggest is: more than they do now.

Washington has seen its share of incompetent or abusive bosses, who throw important government institutions into disorder. But there are so many other factors to consider — expertise, policy positions, political support — that people who have been involved in vetting personnel over the years tell me that managerial skill and temperament almost never even come up.

He has been at the FDIC since 2005 and in charge of the powerful bank regulator multiple times. So when he was nominated to be the chair yet again in 2022, it seemed a no-brainer that he was qualified for the role. Now, he has announced he will resign once a successor is confirmed after reports of a toxic workplace culture at the agency. The White House says it will name a nominee soon.

I’ve never heard anyone question Gruenberg’s dedication to the FDIC’s work or its mission of safeguarding trillions of dollars in deposits and overseeing the nation’s lenders.

But here are some of the words that FDIC employees used to describe their boss when his temper flares, according to a probe into the agency’s workplace culture by the law firm Cleary Gottlieb: “aggressive,” “harsh,” “vitriol[ic]” and “disrespectful.”

“Although most did not want to — or feel comfortable — characterizing the behavior (as opposed to merely describing it), and others reported on their experiences with the chairman only after being granted anonymity, a number noted that Gruenberg, on these occasions, had acted ‘unprofessionally,’ ‘unreasonably,’ and/or ‘inappropriately,’” the law firm said in its report. “Generally speaking, these incidents arose when people were delivering bad news to Chairman Gruenberg or in discussing matters about which he disagreed.”

This type of behavior might sound familiar; nearly everyone has had an unpleasant or overly critical boss at some point.

But people who go through the Senate confirmation process receive particular scrutiny, including an extensive FBI background check, which means that if the government actually wanted to screen for these kinds of red flags, it could.

The White House should consider who might actually be good at managing the agency as it vets replacements for Gruenberg, who is stepping down in the wake of reports of problematic behavior that extends far beyond his own. The administration owes that to the FDIC’s employees, and it should feel similar obligations to other federal agencies, especially given President Joe Biden’s pledge to fire anyone “on the spot” for treating people badly.

After all, even if you aren’t moved by the prospect of government employees leading unhappy lives, poor management comes at a price.

“The policy becomes more effective when you work for a well-functioning organization,” said Graham Steele, who left a Senate-confirmed Treasury job earlier this year (he made clear to me that he has no interest in being considered for the FDIC post).

And although no one cast the problem as being a partisan one, Steele added a message for his side of the aisle: “To me, it ought to be a particular point of emphasis for the Democratic Party, which I think it’s fair to say prides itself on being the party of functional, effective government.”

White House Press Secretary Karine Jean-Pierre has said the president would nominate someone to replace Gruenberg who reflects “the values of decency and integrity.”

The FDIC declined to comment for this column, but Gruenberg has apologized “both in failing to recognize how my temperament in meetings impacted others and for not having identified deeper cultural issues at the FDIC sooner.”

Of course, government jobs differ from other institutions because political appointees come and go, while career staff might stay at an institution for decades. Indeed, career staff are often seen as the ballast keeping a department or an agency running, even if its political head is less effective as a manager.

This can be a positive, if they insulate the workforce from some of senior management’s worst impulses, but also a negative, if they themselves are bad bosses.

Multiple government officials noted that it can be hard for political appointees to make a big impact on workplace culture when they’re going to be there for only a few years. But it’s also harder to achieve their political goals without some attempt to build trust and a healthy work environment, they said.

And yet, managerial effectiveness isn’t often an oversight focus even after someone is put into a Senate-confirmed job.

“I don’t know that I’ve ever seen a member of the House or Senate ask an agency head, why are your [employee satisfaction] scores so low?” said Mark Calabria, who served as head of the Federal Housing Finance Agency under President Donald Trump.

(Calabria took over the agency after it suffered a different kind of blow to morale: His predecessor, Mel Watt, ended his term under the cloud of sexual harassment allegations. Employee satisfaction scores improved under Calabria.)

It’s tempting to suggest some baseline of management experience before being put into a top government job. That seems to be a consideration for some of the highest-profile Cabinet positions, but policy experts who are placed in other leading positions often have backgrounds working on the Hill or at think tanks in roles where they’ve never managed more than a few people.

“It would be great to have more people in positions in leadership who have proven records in leadership — and I say that knowing it probably would’ve excluded me,” Calabria told me.

For example, Jeff Zients, Biden’s chief of staff, has an extensive history of management. He has not only overseen private and public sector entities, but he was also literally a management consultant. That seems to have translated to his current role, and it was particularly useful in his previous position coordinating cross-governmental responses to the Covid-19 pandemic.

But if you talk with personnel people who work in government, they’ll tell you that empathy and character are just as important if not more so than management experience, which in and of itself isn’t a guarantee of success.

When Rex Tillerson stepped down as secretary of state in 2018, my colleague Nahal Toosi reported on his shortcomings as a boss: “Several State staffers have noted over the past year an irony at the heart of Tillerson’s tenure: He took over at Foggy Bottom having had a long track record in management but little diplomatic experience, and yet he proved to be better at the latter than the former.”

It’s worth noting that our standards for how people should be treated at work — yelling is generally no longer OK, for example — have also shifted over time.

Government vetting should adapt.

I’m not saying it’s easy to decide how much these things should matter compared with other factors, in a world where the pool of qualified candidates is finite. But it’s not as if gauging management skill is some impossible task, and a lot of relevant information is available already for rooting out warning signs.

Dale Cabaniss, a former director of the Office of Personnel Management, said people who have been vetting candidates for decades know what types of things to look out for, it’s just a matter of prioritizing them.

“All too often, the world is a difficult, demanding, scary place,” she said. “You’re dealing with so much when you’re on the Hill and when you’re in the administration, and sometimes I feel like we don’t pay enough attention to these kinds of issues, where, if we had looked, we would have seen it.”