by Pam Martens and Russ Martens at Wall Street on Parade
Fed Chair Jerome Powell was quick to refer an investigation into the Fed’s trading scandal to the Inspector General of the Federal Reserve. Notably, he did not refer the matter to the U.S. Department of Justice which has criminal prosecution powers.
Unlike the Inspector General of the U.S. Department of Justice, as well as more than 30 other Federal agencies, the Inspector General of the Federal Reserve is not nominated by the President of the United States and confirmed by the U.S. Senate. Instead, the Inspector General of the Federal Reserve is appointed by the “head” of the Federal Reserve Board of Governors; he reports to that same Board of Governors; and he can be terminated by them with a two-thirds vote.
The Inspectors General have been codified into law under 5a U.S. Code 8G which notes that “Each Inspector General shall report to and be under the general supervision of the head of the designated Federal entity, but shall not report to, or be subject to supervision by, any other officer or employee of such designated Federal entity.”
The Fed’s Board is supposed to consist of seven members (Governors). Currently, one seat is open. Thus, it would take only four votes to terminate the Inspector General.
Mark Bialek is the current Inspector General of the Fed and has been in that position since July 25, 2011. Bialek was appointed by former Fed Chair Ben Bernanke, the Fed Chairman who oversaw the secret $29 trillion bailout of Wall Street, fought the U.S. media for almost three years to keep the details of that bailout a secret, and then took a job at hedge fund, Citadel, after retiring from the Fed.
In addition to the trading scandal that forced former Dallas Fed President Robert Kaplan and former Boston Fed President Eric Rosengren to step down, at least three current members of the Fed’s own Board of Governors, including Chair Powell, have come under scrutiny for their trading activities.
There is some confusion in the law as to whether Jerome Powell, the Chairman of the Federal Reserve Board of Governors, is the “head” of the Fed or whether the full Board is the head, for purposes of hiring the Inspector General.
On the Federal Reserve Inspector General’s website, it notes the following:…
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