Michael E. Horowitz is stepping down as the Justice Department’s longtime inspector general to become the chief internal watchdog official at the Federal Reserve.
He will take over effective June 30, the Federal Reserve said in a statement on Friday. Under a federal law, the chairman of the Fed, Jerome Powell, appoints the agency’s inspector general without presidential input or Senate confirmation.
The role will also give Mr. Horowitz jurisdiction to scrutinize the Consumer Financial Protection Board, an agency the Trump administration is trying to gut, although judicial interventions have slowed down that effort. Mr. Trump made his White House budget chief, Russell T. Vought, the acting head of the board.
Inspectors general are embedded within agencies to hunt for and prevent waste, fraud, inefficiencies and abuses of power. Their creation, in a 1978 law, was a key reform by Congress after the Watergate scandal.
Mr. Horowitz was one of the few inspectors general to be spared when President Trump fired as many as 17 of the officials at major departments or agencies days after returning to office, curbing a significant internal check on how he and his political appointees use their power.
Eight of them have since filed a lawsuit challenging those removals, which violated a law that says a president must give advance notice to Congress and a detailed explanation for any such dismissal.
Mr. Trump and his allies lauded Mr. Horowitz in 2019 after he uncovered serious errors and omissions in the F.B.I.’s applications to wiretap a former foreign policy adviser to the 2016 Trump campaign as part of the Russia investigation.
Still, the purge of his colleagues left Mr. Horowitz in a tenuous position as the key oversight official meant to report misbehavior by law enforcement officials, raising the possibility that acting too aggressively would make him susceptible to being forced out.
Trump appointees at the Justice Department and component agencies like the F.B.I. have undertaken numerous actions that could be fodder for scrutiny, including firing officials in apparent violation of civil-service laws.
While Mr. Horowitz has had broad jurisdiction over the F.B.I. and other subsidiaries of the department, his office does not typically have authority to look at allegations of attorney misconduct at the main Justice Department that fall short of illegality.
That means some recent actions that have drawn intense scrutiny, like the dropping of corruption charges against New York’s mayor, Eric Adams, fell outside his purview. Because the administration made clear that it had done so in part because it wanted Mr. Adams’s help on deportations, several prosecutors resigned over what they saw as an ethical violation.
Mr. Horowitz has told colleagues he plans to remain the inspector general at the Justice Department until the end of June, stepping down the day before he starts at the Fed, according to a person who spoke on condition of anonymity to discuss a sensitive internal matter. His office declined to comment.
It was not clear who would replace Mr. Horowitz as the Justice Department’s inspector general. By statute, his deputy, William M. Blier, is set to become the acting inspector general, but Mr. Trump could also invoke his authority under the Vacancies Reform Act to install someone else.
Notably, the Federal Reserve may soon be the last independent agency standing within the executive branch that is not under Mr. Trump’s control.
Last month, the Supreme Court’s Republican-appointed supermajority allowed Mr. Trump to remove, without cause, the leaders of two agencies that Congress had structured to be independent of direct presidential control.
Many legal experts interpreted the move as meaning that the court is likely to declare unconstitutional Congress’s longstanding practice of creating executive branch agencies that are independent because they are led by commissioners who cannot be arbitrarily fired by the president before their terms end.
Expanding presidential power by ending the power of Congress to make agencies independent has been a goal of the conservative legal movement. But the Supreme Court also explicitly signaled that it is not inclined to apply that principle to the Federal Reserve, which handles macroeconomic policy like raising and lowering interest rates.
Mr. Horowitz earned an undergraduate degree in economics at Brandeis University, then attended Harvard Law School. He worked as a federal prosecutor and at a law firm, and served on the U.S. Sentencing Commission. President Barack Obama appointed him inspector general at the Justice Department in April 2012.
In addition to his work at the Justice Department, he has played a broader leadership role in the community of watchdog officials. He led the council of inspectors general, and during the coronavirus pandemic, he led a committee of such officials from 21 agencies that oversaw $5 trillion in relief spending.
In overseeing the Federal Reserve and the Consumer Financial Protection Board, Mr. Horowitz will succeed Mark Bialek, who retired in April after nearly 14 years as inspector general, the Federal Reserve said.
Charlie Savage writes about national security and legal policy for The Times.
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