Bernanke Faces More Congressional Scrutiny After Republican Election Gains

Joshua Zumbrun

Federal Reserve Chairman Ben S. Bernanke may have to renew his battle to preserve the central bank’s independence after Republican victories in yesterday’s congressional elections.

With Republicans likely reclaiming a majority in the House of Representatives and eroding Democrats’ hold on the Senate, Tea Party candidates who campaigned in part against the Fed get an opportunity to call Bernanke to task for taking part in the unpopular financial rescues that helped propel them to office.

“There’s certainly going to be more hearings and more pressure,” said Mark Calabria, a former Republican Senate Banking Committee aide who is now director of financial- regulation studies at the Cato Institute, a policy research group in Washington that favors free markets.

One new Fed opponent in Congress is Kentucky Senator-elect Rand Paul, who has criticized the Fed for imposing “the sneakiest tax of all — inflation.” He joins South Carolina’s Jim DeMint, an advocate for Tea Party candidates who backed an unsuccessful bill to subject the Fed’s monetary policy to congressional audits.

The Fed has long faced pressure from the left to help spur growth and jobs. Now, the central bank’s most vocal critics are likely to be conservatives calling for greater scrutiny of its decisions, including its role in bailouts of American International Group Inc. and Bear Stearns Cos.

Six out of 10 self-identified Tea Party supporters who said they were likely to vote supported overhauling or abolishing the Fed, according to a Bloomberg News national poll conducted Oct. 7-10.

The article continues at Bloomberg

H/T Drudge Report

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