Republican Senator Rick Scott and Democrat Elizabeth Warren have jointly sought salary information from the Federal Reserve's Inspector General, who acts as the central bank's watchdog.
The move comes as they express concerns about the current system and aim to enhance the role's independence. The letter, viewed by Reuters on Tuesday, highlights their criticisms and outlines their plans to change the appointment process.
In the aftermath of the collapse of Silicon Valley Bank and Signature Bank, members of both parties in Congress have pledged to increase oversight of banking regulators. However, some lawmakers worry that the current inspector general lacks enough independence to effectively oversee the central bank. Unlike other large agencies, the Federal Reserve's internal IG, currently Mark Bialek, reports directly to the Fed board.
Under the Senators' proposal, the appointment to the role of inspector general would be made by the President and confirmed by the Senate, enhancing the role's independence.
The Senators raised concerns in the letter about potential conflicts of interest due to the current compensation structure of the IG. They objected to the IG's salary being linked to the compensation of Fed officials whom the IG is responsible for investigating. This structure could create a financial incentive for the IG to overlook or downplay any wrongdoing by the same officials.
In the letter, dated July 24, Warren and Scott cited Bialek's previous testimony and asked five specific questions related to his salary, including details about his compensation over the past five years and the portion of his salary tied to the average bonus component of the pay formula. They also inquired about any inspections conducted by Bialek in connection with bonuses at the Fed during the same period.
The Office of the Inspector General did not immediately respond to a request for comment from Reuters.
In the past, Bialek has faced criticism from lawmakers, including Warren, for his handling of the securities trading scandal, which led to two regional Fed bank presidents stepping down in 2021. He defended the independence and investigative capabilities of his agency during a hearing in May 2023. Photo by United States Senate Photographic Studio, Wikimedia commons.