Fed Chairman Ben Bernanke
Fed Chairman Ben Bernanke - 
Listen To The Story


Kai Ryssdal: Just when you thought all the politickin' was over with, there's the small matter of monetary policy to grapple with. I know, I know -- you thought the Federal Reserve was supposed to rise above the political fray, right? Or at least not be affected by it too much?

$600 billion does tend to concentrate the political mind. A group of congressional Republicans and conservative economists and commentators is launching an ad campaign this week about the Fed's policy of quantitative easing. They want Ben Bernanke to stop what he's already begun, trying to push down interest rates and so boost the economy.

Marketplace's Nancy Marshall Genzer reports now from Washington.

Nancy Marshall Genzer: This week's ad campaign is just the latest Fed fracas. This month, some Tea Party-backed candidates bashed the Fed and then got elected.

Frederick Mishkin is a former Fed governor. He's now an economist at Columbia University. He says the current political pressure is unprecedented.

Frederick Mishkin: I've been studying the Federal Reserve now for close to 40 years. And I've never seen anything like this.

These days, the Fed is under attack from all corners, including foreign finance ministers blaming the Fed for the lower dollar. Mishkin says intense political pressure can't force the Fed to change policy. But it can lead to that perception when the Fed acts.

Mishkin: There are times when tough decisions have to be made and they need to be somewhat insulated from the political process and if in fact the insulation is weakened by what's happening now that would be a real tragedy.

Mishkin says that if Congress had more control over the Fed, the central bank might not be able to make the right monetary decisions at the right time. But some Fed watchers say the central bank does need some congressional oversight. The Fed was used to very little. Now it is going to have more. Ed Mierzwinski is a consumer advocate with the U.S. Public Interest Research Group.

Ed Mierzwinski: The pendulum swung way too far in the other direction and now the pendulum is pushing towards, well maybe they're not as independent, and they're starting to whine.

The Fed dodged the more draconian oversight proposals in the Financial Reform Bill. But it has to submit to one audit. Mierzwinski expects to work with the Tea Party caucus in Congress to pass tougher oversight legislation.

In Washington, I'm Nancy Marshall Genzer for Marketplace.