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Lawmakers are outraged by the Fed’s inaction in the insider trading investigation

(CNN) Congressional lawmakers grilled Federal Reserve Inspector General Mark Bialek on Wednesday over possible insider trading among Fed officials in 2020, accusing the nation’s central bank of inaction.

The governors of the Boston and Dallas Federal Reserve banks resigned in early 2021 after trades they made before and during the pandemic came to light. Bialek said his investigation into any wrongdoing from the trade is “ongoing.”

A separate investigation conducted by Bialek last year found no wrongdoing stemming from trades made by a financial adviser on behalf of Fed Chairman Jerome Powell’s family trust and by former Fed Deputy Chairman Richard Clarida.

Bialek told members of a Senate banking subcommittee on economic policy that he was limited in what he could reveal because it would hinder his ability to “conduct a thorough, independent investigation” of the former regional bank chiefs’ dealings.

Sen. Elizabeth Warren, D-Massachusetts, interrupted: “You’ve had a year and a half,” she said. “This is not strong oversight. In fact, it’s not even competent oversight.”

As Republican and Democratic lawmakers on the subcommittee pointed out, Bialek, who has served in his role since 2011, was appointed by members of the Fed’s board, which he is tasked with investigating. Bialek told lawmakers there was no conflict of interest and that he was still able to conduct fair, independent investigations. Warren, among others, said she was not convinced.

“It looks like, to everyone in the public eye, you gave your boss a free pass,” she said. “The Fed continues to shut out Congress, shut out the public from the underlying information about these trades. This is not acceptable.”

The inspector general’s office declined to comment Wednesday night.

Renewed push for an independently appointed inspector general

After Silicon Valley Bank collapsed in March, Warren and Republican Sen. Rick Scott of Florida introduced a bill to require a presidentially appointed, Senate-confirmed inspector general for the Fed Board of Governors.

A separate Fed investigation into SVB’s collapse, which does not involve Bialek, faulted Fed supervisors. Scott said Wednesday that he lacked confidence in Bialek’s ability to investigate those Fed oversight breaches.

“Someone at the Federal Reserve who was responsible for these banks for supervision clearly got it wrong,” he said Wednesday, referring to bank collapses since 2008. “The average person in America is paying for all of this.”

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