He portrayed a crucial role in the questionable bailout of American International Group Inc. He is core to how Dodd-Frank is put into practice. Most everything of importance at the Federal Reserve Board goes over his desk.

And you have most likely in no way heard of him.

Scott Alvarez is the Fed’s chief lawyer, but he is much more than that. He is, in the perspective of many, the power behind the throne, the backroom officer who, while well known appointees come and go, silently makes himself essential to them through commitment, mastery of detail and unrivaled understanding of the Fed’s secrets.

And today, for the first time in his 34 years at the Fed, Alvarez is under a spotlight, a unpleasant one, the target of a growing congressional appetite to control the central bank’s power.

The visible reason is that Alvarez guided a failed five-month investigation into a 2012 leak of confidential Fed data. Not only did he not figure out the leak’s source, he did not bring in the Fed’s internal watchdog or the Federal Bureau of Investigation, though they eventually commenced their own probes. Alvarez’s harshest pundits accuse him of not trying very hard and of fighting only to keep outsiders away.

“This is a very, very critical problem for Scott Alvarez and others,” said Laurence Ball, an economics professor at Johns Hopkins University in Baltimore who lost a lawsuit to force the Fed to let go Alvarez’s documents. “They didn’t seem to have a very productive investigation and have not come out with a very clear account of what happened.”

Public Servant

Alvarez almost never talks to journalists. The Fed rejected to make him accessible for this write-up. A spokesman related to a statement introduced in February after Senator Elizabeth Warren blasted him at a hearing. In that statement, Fed Chair Janet Yellen called Alvarez a “dedicated public servant” who she and her colleagues lean on for “expert advice and counsel.”

The issue at the heart of the leak — who gave the firm Medley Global Advisors the illegal information that may have been utilized by investors — remains the subject of an intense congressional probe. In May, House Financial Services Committee Chairman Jeb Hensarling supplied a subpoena that required communications between Alvarez and members of the Fed Open Market Committee, which models monetary policy.

Self-governing Agency

But underlying the argument over the leak and Alvarez is something much bigger: what oversight and control the legislature can apply over the increasingly independent agency, particularly in the wake of its hostile role since the 2008 financial crisis. The Fed’s interventionism — outlined by the purchase of trillions of dollars of Treasury bonds to stir up economic growth — has turned out to be the design for central banks around the world.

The legislative mission for oversight comes from components on both sides of the lane but for different motives. The right prefers control to get the Fed to back off from its activism; the left prefers the contrary — to push it in the direction of increased regulation of the financial sector. Alvarez, named general counsel in 2004 by former Chairman Alan Greenspan, symbolizes the pre-crisis, laissez-faire Fed to supporters on the left.

Both sides criminate the Fed and Alvarez of lack of responsiveness. For instance, when Congress directs questions to the Fed after the chair’s semi-annual testimony, the responses go through Alvarez’s legal department and come back months afterwards, stopping any real exchange or follow-up, one person lamented.

‘On Scott’s Desk’

Alvarez, who is 60, started at the Fed in 1981 straight out of Georgetown Law School, when Paul Volcker was increasing interest rates to destroy inflation. He went up through the ranks of the legal department over the following 2 years.

Those who have performed with Alvarez — this write-up is based on interviews with nearly 2 dozen folks, practically all of whom rejected to be named because of their ongoing connections with the Fed — identify him as brilliant, stubborn, loyal, maddening and compassionate. The term “on Scott’s desk” was created by Fed employees to convey their frustration with the piles of paperwork that Alvarez demands on personally vetting.

He’s hesitant to assign his power and, regardless of his mild manner, micromanages when he does, 2 people stated.

Walk past his office after the summer sun has set behind the National Mall and you are probably to find Alvarez still at his desk, point out current and former co-workers. He is also there most Saturdays and often on Sundays, a testimony both to his work ethic and penchant for micromanagement, former colleagues point out. Alvarez is a frequent donor to Catholic charities in Washington and elsewhere, newsletters from the organizations demonstrate. He has an adult son who also performs as a attorney.

‘Born at the Fed’

Alvarez so distinguishes with his agency that he quipped to a congressional panel in 2010 that he was “born at the Federal Reserve.” That was reprised as a video skit at the legal division’s Christmas party — featuring a grade-school boy donning an Alvarez-style mustache. His is gray and neatly clipped.

His competitors, who rejected to be specified by name because they presumed it would mess with relations with the agency, paint Alvarez as a stumbling block to rapid execution of the Dodd-Frank act who has attempted to undermine needed control.

Former administration officials, banking regulators and congressional aides, who all rejected to be cited by name, lamented that Alvarez was adamant on obtaining a new law passed before the Fed could control insurers differently than banks under a section of the Dodd-Frank act. Those critics mentioned it was unnecessary and postponed needed capital-safety rules.

Pushed Back

Alvarez stated in testimony a year ago that the agency was hamstrung under the amendment and that there required to be a new amendment passed by Congress.

In 2013, Treasury Secretary Jacob J. Lew forced regulators to accelerate their work on the Volcker rule, one of the most good provisions in Dodd-Frank. The Treasury was matching the efforts of 5 other agencies.

Alvarez pushed back, based on 2 people acquainted with the issue, making obvious his place that the Fed is independent and did not have to allow for the political side of government or pay attention to pressure from President Barack Obama to complete the rules.

Stubbornness and loyalty, 2 of the traits cited by both Alvarez’s detractors and supporters, were on show during a lawsuit challenging the lawfulness of the 2008 rescue of AIG. Alvarez had a behind-the-scenes part in the insurer’s bailout, helping regulators set up a legal basis for their selection.

Overstepped Authority

When he testified at the trial in September 2014, Alvarez continuously fought for the meaning of words and was admonished by the judge to respond to the plaintiff lawyer’s questions. “I don’t know what ‘many’ means,” Alvarez stated in response to one question. Asked whether or not investment-grade security is regarded as better than non-investment-grade security, Alvarez stated, “it could be; it could not be.”

A judge ruled June 15 that the Fed overstepped its power in setting the terms of the bailout, but rejected to award losses. The Fed certainly answered in a statement stating it “strongly believes that its actions in the AIG rescue during the height of the financial crisis in 2008 were legal, proper and effective.”

As that ruling implies, protecting the agency’s autonomy is getting more difficult. Along with the House subpoena, Manhattan U.S. Attorney Preet Bharara, recognized for his insider-trading prosecutions, is also going after the matter, as are the FBI and the Fed’s inspector general.

On Wednesday, House Republicans charged the Fed of “willful obstruction” and slowing down the investigation. In an eight-page letter, they mentioned the agency had no legal foundation to decline to turn over the documents demanded in last month’s subpoena.

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