Bloomberg - Bernanke Seeks to Cordon Off Monetary Policy From Lawmakers

By Craig Torres

July 22 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke sought to cordon off the central bank’s independence on monetary policy from congressional scrutiny as lawmakers challenged its authority on everything from currency swaps to emergency loans.

The 55-year-old Fed chairman yesterday stepped up his defense of the central bank as it faces a bill with 275 legislator-sponsors to repeal immunity from audits of monetary policy. Bernanke told the House Financial Services Committee that Fed actions helped avert a credit “collapse,” and gave Congress its own task: cut “unsustainable” budget deficits.

As lawmakers embark on the biggest financial-regulation overhaul in generations, “everything is up for grabs,” including Fed independence, said Christopher Rupkey, chief financial economist in New York at Bank of Tokyo-Mitsubishi UFJ Ltd. It would “open a Pandora’s box” for Congress’s Government Accountability Office to probe monetary policy, he said.