NEW YORK (Bloomberg) — US Securities and Exchange Commission chairman Mary Schapiro faces scrutiny from congressional Republicans over how she will deal with employees who missed Bernard Madoff's $65 billion Ponzi scheme.

Representative Scott Garrett, the top Republican on a House subcommittee that oversees the SEC, asked Schapiro in a letter yesterday whether she's fired any employees involved in the Madoff investigations. Senator Richard Shelby, the ranking Republican on the Banking committee, said in a September 10 interview that "heads have to roll" at the SEC for missing the scheme.

SEC Inspector General H. David Kotz this month detailed missed opportunities on Madoff since 1992 because the SEC assigned inexperienced lawyers, managers denied requests to expand probes and staff didn't follow up on leads. If no employee has been terminated, Garrett, of New Jersey, said he wants a "detailed explanation" from Schapiro.

"These new details about the Madoff failure prompt some obvious questions to which I'd like you to provide some answers," Garrett said in his letter.

SEC spokesman John Nester said in response to Garrett that the agency will "thoroughly examine all of the conduct and take appropriate action". SEC Enforcement Director Robert Khuzami said at a September 10 hearing that US rules that restrict agencies from firing employees are "not an impediment" to overhauling the division.

Garrett also questioned whether a $33 million SEC penalty on Bank of America Corp. raised "themes" similar to the failed Madoff investigations. The SEC fine resolved allegations Bank of America deceived investors about bonuses to be paid to Merrill Lynch & Co. executives before they approved an acquisition of the securities firm.

US District Judge Jed Rakoff yesterday rejected the settlement, saying it appeared to be a "contrivance" between the agency and the company. Rakoff asked why Bank of America executives and their lawyers weren't sued.

The SEC has argued in legal briefs that federal law restricted it from sanctioning individuals over Bank of America's disclosures because it lacked evidence to sue executives for fraud.