While former-Rep. Ron Paul's showdowns with Ben Bernanke recede into yesteryear, his calls to "Audit the Fed" may once again reverberate through the halls of Congress.
Financial executives say a GOP-led Senate would ratchet up congressional scrutiny of the central bank's interest-rate policies as well as its regulatory duties as overseer of the nation's largest financial firms.
"If the Republicans take control of the Senate and thus have control of both the House and the Senate—two words for the Federal Reserve: Watch out," said Camden Fine, president of the Independent Community Bankers of America.
Fed Chairwoman Janet Yellen may have put the (perhaps temporary) kibosh on quantitative easing, but that's not enough for critics of the central bank:
Many Republicans want Fed officials to move quickly now to raise interest rates from near zero and shrink the central bank's balance sheet, which has climbed to near $4.5 trillion.
Scrutiny of the Fed's monetary policies and regulatory activities has sometimes been a bipartisan affair. This past year, the chairman of the House Financial Services Committee, Rep. Jeb Hensarling (R-Tex.), held 11 hearings looking into the Fed's activities. In a few weeks, Sen. Sherrod Brown (D-Ohio) will preside over a Senate Banking Subcommittee on Financial Institutions and Consumer Protection hearing on an unsettling report of impropriety in the relationship between the Fed and Goldman Sachs. And the Federal Reserve Transparency Act passed in the House of Representatives with overwhelming bipartisan support back in September. But for reasons unknown, Senate Majority Leader Harry Reid (D-Nev.) has kept this latest "Audit the Fed" proposal off the floor.
Perhaps the fed audit legislation put forward by Sen. Rand Paul (R-Ky.) will have more luck after today. That bill has support from other Senate Republicans, including Sen. Mitch McConnell (R-Ky.), who will probably become Senate majority leader if the GOP wins the chamber—and if McConnell wins his own re-election.
Even if no legislation actually passes, the heightened attention on the Fed's activities could still be beneficial:
A slate of hostile congressional hearings questioning the Fed's every move and movement of legislation would…force the Fed to play more defense.
For their part, Fed officials oppose congressional audits and other external meddling in their affairs, arguing that the bank's political independence is actually a feature and not a bug. In her confirmation hearings Yellen said, "I would be very concerned about legislation that would subject the Federal Reserve to short-term political pressures that could interfere with that independence."
In any event, we'll soon find out whether the GOP is doing more than its usual blustering at fiscal irresponsibility.