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Fed Inspector General Defends $378,000 Pay From Senate Criticism

(Bloomberg) -- The Federal Reserve’s top internal watchdog is pushing back against lawmaker criticism of his $378,000 annual salary and the independence of his office.

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Mark Bialek, the Fed’s inspector general, told senators on a Banking Committee subcommittee that the pay was necessary to attract appropriate talent. Bialek also bristled at the suggestion that he lacked independence because he could be fired by the Fed’s board, adding that there were many watchdogs in the government with a similar structure.

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“We have investigations going on all the time where we find wrongdoing,” Bialek said during a Wednesday hearing. “We wind up deciding to do our investigations completely on our own without any input from anybody. Nobody has tried to prevent us from doing any of our investigations.”

Bialek said his pay is based on the average of the salary and bonuses paid to the Fed’s division directors and other executives. Democratic Senator Elizabeth Warren of Massachusetts and Republican Senator Rick Scott of Florida have proposed legislation that would require the Fed’s watchdog to be appointed by the president and confirmed by the Senate, similar to agencies like the US Treasury.

“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, a Democrat from Massachusetts, said of Bialek’s salary 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.”

The Fed inspector general salary is significantly higher than what Fed Chair Jerome Powell earns. Powell’s salary is set according to level 1 of the US government executive pay scale, which this year will rise by 4.1% to $235,600. However, because of a pay freeze for certain senior officials in place since 2014, Powell got no annual raise and his salary remains $203,500 for 2023.

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