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The Federal Reserve faces more oversight from the US Congress under a bill that will be voted on before the end of the year, according to leading Democrats. Ron Paul, the Republican congressman from Texas, has attracted wide bipartisan support for legislation that would give Congress a greater check over the Federal Reserve, the culmination of a 30-year campaign. Ben Bernanke, chairman of the central bank, has warned that any political interference could shake markets, increase inflation and drive up the cost of servicing US debt for generations to come. The two points of view had seemed irreconcilable and with more than half of the House of Representatives having lent their support to the bill, Barney Frank, the chairman of the House financial services committee, was under pressure to bring it to the floor.
But Mr Frank is aiming to bring forward legislation that would safeguard the Fed's monetarywhile en policy independence hancing transparency and creating checks and balances for theBut Mr Frank is aiming to bring forward legislation that would safeguard the Fed's monetary policy independence while enhancing transparency and creating checks and balances for the bank's use of emergency lending powers. bank's use of emergency lending powers. "I want to restrict the powers of the Federal Reserve in a number of ways," Mr Frank told his town hall audience. He cited the proposed Consumer Financial Protection Agency, which would take protection of consumer interests from the Fed, and said he was concerned about the central bank's freedom to lend wherever it wants under its "section 13 (3)" powers. The Fed used the powers to lend to AIG, the now quasi-nationalised insurance group, which faced collapse last year at the height of the financial crisis. That is one of several areas of concern to a number of politicians, such as Mr Paul, who accuse the Fed of being unaccountable and wielding too much authority. "Fed sycophants argue that an audit would destroy the financial markets' faith in the Fed," said Mr Paul in a speech last month.
Mr Frank is aiming to bring forward legislation that would safeguard the Fed's monetary policy independence
Just something weird about him supporting this so late in the game.