Senators Rick Scott, Elizabeth Warren, and Cynthia Lummis have sent a letter to Federal Reserve Chairman Jay Powell, seeking clarification on actions taken by the central bank’s inspector general. The senators allege that Michael Horowitz, the current inspector general for the Federal Reserve, advocated against bipartisan legislation designed to create an independent Senate-confirmed inspector general at the Fed.
The letter highlights concerns over Horowitz’s reported visits to Senate offices, including those of Scott, Warren, and Lummis, where he argued against their proposed bill. The senators note that Horowitz also contacted them directly to share his opposition. This follows what they describe as “a troubling pattern” set by Powell’s previous inspector general, who had publicly opposed similar efforts.
In their message to Powell, the senators wrote: “Earlier this month, a bipartisan majority of senators voted to support our legislation to create a truly independent inspector general (IG) at the Federal Reserve (Fed). As you may know, the inspector general of the Federal Reserve (Fed), Michael Horowitz, has recently visited offices on Capitol Hill to advocate against our bipartisan bill to establish an independent inspector general at the Fed. Mr. Horowitz also reached out to us personally to share his concerns about our legislation. These actions continue a troubling pattern set by your previous inspector general, who wrote an open letter expressing disapproval of our bill. In light of these visits, we write to request an answer, in writing and to be made public, as to whether you or any other Federal Reserve staff in any way directed or suggested that Mr. Horowitz come to Congress to advocate against the creation of a truly independent inspector general at the Federal Reserve.”
The senators questioned why some employees at the Fed would oppose legislation intended “to implement healthy oversight and ensure the Fed and its employees are held accountable.” They expressed particular concern that “the Fed’s inspector general…would advocate against this legislation,” stating that it aims “to fix the existing reporting structure that currently incentivizes him to overlook violations, do the bidding of you and the Federal Reserve Board, and shield bad actors.”
According to Scott, Warren, and Lummis: “Our goal with this bill is to strengthen trust in the Fed and hold Fed employees accountable for the many reported accounts of misconduct, mismanagement, and conflicts of interest – a goal that any independent inspector general should support. However, instead of supporting legislation that creates true independence for the Fed IG and allows this accountability, the current inspector general is working to maintain the status quo–making it easier for the Fed and its IG to shield bad actors and those at the Fed who may abuse their power and insider knowledge at the expense of the American people.”
They further stated: “Allowing the Fed’s inspector general to be appointed by the Federal Reserve Board, report to the Federal Reserve Board, and be paid by the Federal Reserve Board is a clear conflict of interest.”
The senators asked Powell for a public written explanation regarding opposition within his staff toward creating an independent watchdog role at America’s central bank. Their letter concludes: “The American people deserve a Federal Reserve that is committed to proper oversight, accountability, and transparency. That goal should be shared by the Federal Reserve’s employees.”
