GOP to turn up heat on Fed in 2015

Republican control of the Senate makes it likely that Alabama's Richard Shelby, the senior Republican on the Committee on Banking, Housing, and Urban Affairs, will become its chair, steering the committee that oversees the Fed.

"I don't think he's a big fan of the Fed," Hugh Johnson, chairman of Hugh Johnson Advisors, said of Shelby, a onetime central bank backer who turned into a Fed critic during the financial crisis.

Shelby opposed Yellen's nomination as vice chair in 2010 and then as chair last year. He also fought President Barack Obama's 2010 nomination of Nobel Prize-winning economist Peter Diamond to serve as Fed governor, with Diamond subsequently withdrawing from consideration. Two of seven board seats remain vacant.

"Anyone very dovish is not even going to get a hearing or a vote," said Mark Calabria, a former staff member for Shelby and now director of financial regulation studies at the Cato Institute, a libertarian think tank.

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"Shelby, who is expected to chair the banking committee, is sympathetic to getting the Fed out of bank regulation, but getting 60 votes for that is a tough thing to do," Calabria added.

Legislation that passed the House in September and sponsored by Georgia Republican Paul Broun would require the comptroller general to audit the Fed's board of governors and banks within a year and report back to Congress on its findings. Rand Paul, R-Kentucky, has introduced companion legislation in the Senate.

"Rand Paul will likely come down and demand a Fed audit, but it's an open question at this point whether there will be a vote. There's a small handful of Republicans who were not terribly sympathetic to it," Calabria said.

The measure has a good chance of passing should it be brought to a vote, Calabria said.

House Financial Services Committee Chairman Jeb Hensarling, a Texas Republican, told Bloomberg News in an October statement that he had already "held a number of conversations with Sen. Shelby, who might, and hopefully will, be the next Senate Banking Committee chairman, and we have had preliminary discussions about what he would like to achieve."

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GOP to turn up heat on Fed in 2015

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