| WASHINGTON, July 10
WASHINGTON, July 10 A surge of Republican
pressure is bringing the Federal Reserve's long-held
independence into question again, as conservative lawmakers seek
to place the U.S. central bank under tougher scrutiny.
With Democrats controlling the Senate since the 2008
financial crisis, the bank and its supporters have had the
luxury of shrugging off Fed-related laws from the
Republican-controlled House of Representatives.
But a Republican takeover of the Senate in November's
midterm elections would increase the chances of some of those
measures hitting the Senate floor, and changing the way the Fed
Two Republican congressmen proposed a new bill on Monday
that would force the Fed to disclose information it has
historically kept private. That bill will be discussed at a
hearing on Thursday by the House Financial Services Committee,
which is convening a panel to discuss reforming the Fed.
"I think there's a chance of legislation that affects us,"
Richmond Fed President Jeffrey Lacker, told reporters in
Lynchburg, Va., last month. "I think it's something that people
within the system are aware of. I just hope it's legislation
that's constructive and useful."
At least two of the Senate seats up for grabs feature
candidates who strongly support auditing the Fed, including Rep.
Cory Gardner of Colorado and Rep. Steve Daines of Montana. Polls
show Daines well ahead in his race while Gardner is neck and
neck with his Democratic opponent.
Bills under proposal include measures that would force the
Fed to be officially audited, conduct cost-benefit analysis
before issuing regulations, restrict the power of the Fed chair,
and strip the Fed of its low-unemployment mandate.
"While he believes the agency must remain independent, it
should not be immune from congressional scrutiny," said Alee
Lockman, Daines' communications director. Daines also believes
Congress should change the Fed's mission, Lockman said.
The Fed has faced political pressure at various points in
its 100-year history, starting with its inaction during the
Great Depression, and for its high-inflation policies of the
1970s. Bank bailouts and the Fed's economic stimulus after 2008
also brought the ire of politicians, and featured in the 2012
U.S. Republican presidential nomination campaign.
Republican candidate Rick Perry famously said that then Fed
Chairman Ben Bernanke would be treated "pretty ugly" in Texas if
he printed money ahead of the election.
"Hopefully common sense will prevail. Applying cost-benefit
analysis to regulation is no different than what most regulatory
agencies do," said Austan Goolsbee, economics professor at the
University of Chicago, Booth School of Business. "Moving deeper
into the auditing of the Fed's monetary policy decisions,
however, puts the issue of Fed independence right in the
cross-hairs," said Goolsbee, a former economic adviser to
President Barack Obama and chairman of the Council of Economic
Advisers from 2010-2011.
(Editing by James Dalgleish)