Sens. Warren, Scott push for Fed inspector general’s salary details

Sens. Elizabeth Warren (D-Mass.) and Rick Scott (R-Fla.) on Monday made an official request for salary details of the Federal Reserve’s inspector general and raised concerns about the potential conflicts of interest inherent in the structure of the position.

In the the letter, which was addressed to Federal Reserve Inspector General Mark Bialek, Warren and Scott again pressed for legislation that would make the inspector general a Senate-confirmed position and would make it independent from the agency that it oversees. 

“You are supposed to be the watchdog of exactly the people who have the power to hire and fire you,” they said in the letter, citing exchanges from a recent hearing, during which they said the nature of the conflict was exposed. 

In one exchange with Sen. John Kennedy (R-La.), Bialek explained that his compensation was determined by taking the average of the salaries and the average of the bonuses of the 12 individuals at roughly comparable seniority to him – all of whom Bialek, as inspector general, is responsible for overseeing.

Warren clarified the compensation structure in a separate exchange cited in the letter. 

“Your compensation is the average of the other people who you investigate…it’s their salaries plus their bonuses. So if your investigation finds they did really bad and stupid things that causes them not to get bonuses, what happens to your compensation?” Warren asked Bialek in an earlier hearing cited. Bialek confirmed that his salary would be reduced. 

“This was a deeply troubling set of answers. It revealed that – 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. 

Warren and Scott set a deadline of seven calendar days to respond to a list of questions asking about the salaries and bonuses of the 12 Federal Reserve officials for the past five years. They also asked for information on any audits, evaluations, or inspections related to these 12 individuals conducted in the last five years.