Fed critic to take reins of House oversight panel

* House GOP picks Fed critic Paul for oversight panel

* Move signals Fed to face scrutiny, likely challenges

By Mark Felsenthal

WASHINGTON, Dec 9 (BestGrowthStock) – Republicans in the U.S. House
of Representatives on Thursday picked Ron Paul, an inveterate
critic of the Federal Reserve, to head a panel that oversees
the central bank, paving the way for challenges to the Fed’s
authority and secrecy.

Paul, a congressman from Texas who has often been outside
the mainstream with his contempt for the Fed, has made clear he
does not plan to let a leadership role cool his passion.

“I think they’re way too independent. They just shouldn’t
have this power,” the lawmaker told Reuters last month. “Up
until recently it has been modest but now it’s totally out of
control.”

Paul will the new chairman of the domestic monetary policy
subcommittee of the House Financial Services Committee.

Paul’s views have gained wider acceptance after the
November midterm elections swept many activist Republican
candidates to power. Republicans won control of the House and
new clout in setting the agenda in Washington.

The Fed’s recently launched initiative to buy $600 billion
in Treasury securities to spur economic growth has raised howls
of protest from many Republican lawmakers in an unusual
instance of political second-guessing of monetary policy.

Critics say the program risks igniting inflation and
debasing the value of the dollar.

To address what some lawmakers view as overreaching by the
Fed, senior Republicans have called for stripping the Fed of
half of its dual mandate, saying it should focus exclusively on
fighting inflation and no longer be tasked with ensuring full
employment.

The Fed could find itself facing a renewed effort to allow
Congress to review its monetary policy decisions, and Paul’s
panel could play a central role.

Paul has written a book called “End the Fed” and believes
the dollar should be backed by gold or silver. The United
States stopped linking the dollar to gold in 1971.

Paul won surprisingly broad support for legislation
requiring congressional audits of monetary policy decisions
earlier this year. The Fed strenuously opposed the measure on
the grounds it would undermine the central bank’s highly valued
independence and succeeded in keeping it out of financial
regulatory reform legislation signed into law in July.

Paul’s subcommittee chairmanship and a surge of
anti-government energy in the new Congress could revive efforts
to audit Fed policy.

Paul also said he hopes to hold hearings looking into
global financial organizations like the International Monetary
Fund.

It remains to be seen how much Paul plans to use his
new-found influence to build consensus behind legislative
changes to the Fed’s role.

His maverick streak was on display this week when he was
the only member of Congress to vote against calling for the
release of jailed Chinese dissident Liu Xiaobo, who is due to
receive the Nobel Peace Prize.
(Additional reporting by Andy Sullivan; Editing by Kenneth
Barry)

Fed critic to take reins of House oversight panel