Mark Bialek, the inspector general for the Federal Reserve, defended his position's independence and integrity before senators Wednesday, as several questioned the inspector general's ability to conduct comprehensive oversight.
"We exercise our independence most directly in how we perform our work," Mr. Bialek told members of the Subcommittee on Economic Policy.
However, Subcommittee Chairwoman Elizabeth Warren, D-Mass., was adamant that an internally appointed inspector general cannot act without bias. The Fed's inspector general is appointed by the chair of the Federal Reserve Board of Governors and oversees the Fed Board as well as the Consumer Financial Protection Bureau.
In March, Ms. Warren and Sen. Rick Scott, R-Fla., introduced a bill to require that the Fed's inspector general be appointed by the president and confirmed by the Senate, in the wake of the Silicon Valley Bank failure.
"Silicon Valley Bank's failure was another symptom of what has become a predictable string of failures in the governance of the Federal Reserve," Ms. Warren said Wednesday in her opening statement.
Ahead of the hearing, Ms. Warren and Mr. Scott also sent a letter to Mr. Bialek, pushing back on a letter they received from him that opposed their bill. Mr. Bialek wrote that changing the inspector general role to be presidentially appointed and Senate confirmed would create "difficulty in attracting quality candidates to the position," and lower the position's compensation below what is needed for recruiting appropriate talent, according to the senators' letter.
Ms. Warren pressed Mr. Bialek on this during the hearing, asking what his salary is currently. When he responded that it's close to $378,000, Ms. Warren said it makes sense that he would not want to give up that salary, calling the job a "cushy gig."
"But I don't believe that your self-interest should outweigh the importance of good governance and independent governance at the Fed," Ms. Warren added. She also questioned whether Mr. Bialek is able to thoroughly conduct investigations at the Fed without influence.
"No board chair has resisted or objected to our oversight work since I have been the I.G.," Mr. Bialek said. "If that were to happen, I would not hesitate to report that to Congress."
Ms. Warren and Mr. Scott announced the introduction of another bill on Wednesday, before the hearing, to reform the governance of the Fed's regional banks. The bill would limit large banks from serving on regional banks' boards of directors, clarify board directors' responsibilities and require increased transparency and oversight of the regional banks, according to a summary of the legislation.
