The ostensibly independent Federal Reserve has become compromised to the point that it is just “one more Obama bureaucracy,” the Republican chairman of the House Financial Services Committee claimed in an interview aired Sunday.
“The Federal Reserve has become a highly, highly partisan institution,” said Jeb Hensarling, a Texas conservative. “It’s lost a lot of its independence, it’s lost a lot of its respect, it’s lost a lot of its credibility.”
Hensarling has introduced a financial regulatory reform bill that would pare back Dodd-Frank regulations for banks that increase their capital levels, while also imposing a number of reforms on the Federal Reserve. Under his legislation, the Fed would have to more clearly compare its monetary policy to a pre-specificed rule, and the central bank’s regulations would be subject to greater cost-benefit analysis.
Years into the Fed’s conduct of extraordinary monetary policy and its new regulatory powers under Dodd-Frank, House Republicans have become increasingly critical of its operations and of its head, Janet Yellen, an Obama appointee.
Hensarling engaged in a similar line of criticism in Sunday’s interview, deploying some of his harshest comments yet. His remarks were elicited by a question from a C-SPAN interviewer about House Democrats’ statements in favor of greater ethnic and gender diversity at the Fed.
“There’s no diversity of opinion at all, which is the most important diversity that counts,” Hensarling responded. Instead, they are ideologically aligned with the Obama administration in his regard.
The Federal Reserve, a unique governmental institution that has both public and private components, is structured as such in order to make decisions about the money supply independent of the influence of the executive branch or the legislature.
“In so many ways, the independence of the Fed has been compromised,” he said. “It is a partisan institution.”
