Republican U.S. Senator Rick Scott and Democrat Elizabeth Warren have asked for salary information from the Federal Reserve’s inspector general, the central bank’s watchdog, in a push to make the role independent, a letter seen by Reuters on Tuesday shows.
The IG’s office said it was reviewing the letter and declined further comment.
Republicans and Democrats in Congress have pledged tighter oversight of banking regulators following the collapse of Silicon Valley Bank and Signature Bank in March.
The Fed is responsible for supervising – monitoring, inspecting and examining – certain financial institutions to ensure compliance with rules and regulations, and safe and sound operations.
Some in Congress worry that Fed Inspector General Mark Bialek’s role is not independent enough, because he reports directly to the Fed board.
Under the senators’ plans, the IG would be appointed by the U.S. president and confirmed by the Senate.
Among their concerns, the senators wrote in the letter, is that the IG’s compensation structure could result in potential conflicts of interest. His salary is tied to the compensation of Fed officials he is tasked with investigating.
“… Because the Fed Inspector General’s salary is in part based on the bonuses earned by other Fed employees … there is a structural, financial incentive for the IG to overlook or downplay wrongdoing by those Fed officials,” Warren and Scott wrote in a letter to Bialek dated July 24, citing his previous testimony.
“These types of conflicts are why we have introduced legislation ….”
The letter detailed five questions, including what salary Bialek had received over the last five full calendar years, what percentage of his salary was based on the average bonus component of the pay formula, and whether he had conducted any inspections in connection with Fed bonuses in the last five years.
Bialek has faced criticism from Warren and other lawmakers for his handling of the securities trading scandal that caused two regional Fed bank presidents to step down in the fall of 2021.
At a hearing in May 2023, Warren blasted him for failing to produce a report on a matter that tarred the Fed’s reputation when it was reported nearly two years ago.
Bialek defended his agency’s independence and ability to conduct investigations.
“No Board Chair has resisted or objected to our oversight work since I have been the IG,” he said at the time.