In our view, the Federal Reserve is facing one of its most formidable institutional challenges in two decades. To be sure, Congress made a hard push for GAO audits and other FRB restrictions during Dodd-Frank consideration, but the central bank actually ended up with far more formidable systemic-supervisory authority and only limited constraints on its emergency-liquidity powers. This legislative assault on the central bank isn’t bipartisan – it comes principally through sweeping legislation by the House Financial Services Republican leadership – but it will gain traction after the midterm election among both conservatives and Republicans. Remaining differences – Democrats strongly oppose a rule-based monetary policy – will complicate action in the next Congress, but growing concern about the FRB’s role as the supervisor of the largest financial-services firms and the global regulatory framework provide considerable common ground.

Federal Financial Analytics has recently completed an in-depth analysis of the new House GOP legislation rewriting FRB monetary-policy and global-regulatory responsibilities. If you would like to see it, call 202-589-0880 or email at