Exclusive: U.S. watchdog to probe Fed's lax oversight of Wall Street

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The probe, which had not been previously reported or made public, is the first by an outside agency into the perception that government regulators are "captured" by and too deferential toward the bankers they supervise, so that Wall Street benefits at the public's expense.

Such perceptions have dogged the U.S. central bank since it failed to head off the 2007-2009 financial crisis that sparked a global recession. The Fed's biggest critics have since been Republicans looking to curb its policy independence, but the request by Democrats could cool its somewhat warmer relationship with the left.

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In the letter, Waters and Green said they are particularly concerned about reports of a "revolving door" between the New York Fed and the banks, and "a reluctance to challenge" them. The lawmakers want the GAO to use New York Fed actions between January 2008 and January 2015 as a "case study" for the broader investigation.