Dive Brief:
- Sens. Elizabeth Warren, D-MA, and Rick Scott, R-FL, are introducing legislation that would require a president-appointed and Senate-confirmed inspector general to the Federal Reserve board and the Consumer Financial Protection Bureau, to establish an independent IG, the lawmakers said Tuesday.
- The senators, who introduced a similar bill two years ago, asked Fed Chair Jerome Powell to support the legislation and criticized former Fed IG Mark Bialek, who stepped down in April after 14 years in the role, for his “failure to appropriately address corruption” at the central bank, according to a Tuesday letter.
- Warren, the ranking member of the Senate Banking Committee, and Scott also urged Powell to appoint a new IG “with a demonstrated history of effectively holding government officials accountable for corruption and mismanagement.”
Dive Insight:
A Fed spokesperson said the central bank has received the letter and plans to respond.
The bipartisan issue is one Warren – a frequent critic of Powell’s – and Scott – an ally of President Donald Trump, who’s repeatedly complained about the Fed chair – have drawn attention to before.
The senators introduced a similar bill in March 2023, amid regional bank failures, seeking to have the Fed IG be appointed by the president and confirmed by the Senate. They also, later that year, pressed the Fed IG to share his salary information; in Tuesday’s letter, they referred to the IG’s “perverse compensation package,” which was about $378,000 two years ago.
Currently, the IG is tasked with overseeing and holding accountable Fed officials who’ve installed the person in the role, posing serious conflicts of interest, Warren and Scott said.
Bialek failed to “aggressively” hold senior Fed officials accountable amid ethics concerns, regulatory failures and bank collapses, lawmakers asserted.
That includes Fed official “misbehavior,” such as Fed leaders’ 2020 trades of individual stocks and investments while setting monetary policy in response to the COVID-19 pandemic, and hundreds of prohibited trades by Federal Reserve Bank of Atlanta President Raphael Bostic, Warren and Scott noted.
The former led the Fed to implement new rules barring board governors, regional presidents and senior staff from buying individual stocks, holding investments in individual bonds or agency-backed securities, or entering into derivatives.
Rather than having the Fed chair select the IG, a presidential selection and Senate confirmation is “the same process by which inspectors general for major federal agencies are selected,” and would ensure that “future Fed IGs operate independently of the Board,” the senators wrote.
Prior to serving as IG for the Fed and CFPB, Bialek was deputy inspector general and counsel at the Environmental Protection Agency for a dozen years, deputy counsel at the State Department for 12 years, and assistant counsel at the Commerce Department for seven years, according to his LinkedIn profile.
