Dive Brief:

• Sens. Rick Scott, R-FL, and Elizabeth Warren, D-MA, want the Federal Reserve’s inspector general to share his salary information, part of the lawmakers’ broader effort to establish a more independent inspector general at the central bank, according to a letter seen Tuesday by Reuters.
• "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 the letter, dated Monday.
• The failures of Silicon Valley Bank and Signature Bank prompted Warren and Scott to introduce a bill in May that would give the central bank an IG who is appointed by the president and confirmed by the Senate.

Dive Insight:

The Fed’s inspector general, Mark Bialek, reports directly to the central bank’s board — a point Warren in particular has zeroed in on before.

In a letter to Bialek ahead of a May hearing, Warren criticized his handling of a trading scandal that embroiled his boss, Fed Chair Jerome Powell, and forced two regional Fed presidents to resign in 2021.

“The people who hired you and who have the power to fire you — that dynamic tends to create watchdogs that don’t bark,” Warren said in May, according to Reuters. “At best, you are in an impossible compromised position when it comes to investigating wrongdoing at the Fed.”

In a May hearing in front of a Senate Banking subcommittee, Bialek defended his independence as the Fed’s IG, as well as his $378,000 annual salary, saying the pay is necessary to attract appropriate talent, according to Bloomberg.

“You realize that makes you the highest paid employee at the Fed and, in fact, one of the highest paid officials in the entire federal government,” Warren said during the hearing. “We need to fix the Fed inspector general to make sure that the office is truly independent and can do its job.”

In Monday’s letter, Warren and Scott posed several questions to Bialek, including what salary he had received over the past five years and whether he had conducted any inspections in connection with bonuses at the central bank in the past five years, according to Reuters.

The lawmakers objected to having the IG's salary tied to the compensation of Fed officials whom the watchdog is tasked with investigating, the wire service reported.

“These types of conflicts are why we have introduced legislation," the senators wrote Monday.

Warren and Scott’s effort comes amid a bipartisan push for more bank oversight following the collapse of several regional lenders in March and May.