Federal Reserve officials, concerned that their recently announced round of asset purchases won't be enough to jolt the economy, are pushing for Congress to provide additional fiscal stimulus. In doing so, they could be putting themselves in the cross-hairs of ascendant Republican lawmakers.
In a speech Wednesday, Fed Vice Chair Janet Yellen declared (as reported by the Wall Street Journal): "We need, and I believe there is scope for, an approach to fiscal policy that puts in place a well-timed and credible plan to bring deficits down to sustainable levels over the medium and long terms while also addressing the economy's short-term needs." Those "short-term needs" are a clear reference to using additional stimulus spending to bring down unemployment -- stuck at 9.6 percent.
And in some recent speeches of his own, Fed Chairman Ben Bernanke has sounded a similar call for additional fiscal stimulus.
Last month, the Fed announced it would buy $600 billion of Treasury bonds, in a bid to juice the economy. Fed officials have acknowledged, though, that on its own, the move won't be enough.
But the Fed's push for more stimulus could draw charges that it's inappropriately interfering in the political arena, compromising the traditional independence of the central bank. In response to last month's asset purchases -- a move broadly opposed by conservatives -- two Republicans have already suggested changing the central bank's mandate so that it focuses only on controlling inflation, and not on reducing unemployment.
The Fed is also under fire after it revealed that it had paid $1.5 trillion to help prop up both U.S. and foreign banks in the financial crisis.
(Photo of Bernanke: AP/Dennis Cook)