Tim Geithner testified before the Senate Banking Committee yesterday, but as the Washington Post reports, it's not the Treasury but the Fed whose growing powers most worry legislators. Republicans and Democrats are both venting that Ben Bernanke's office did little to stop the excesses of the boom years, only to release $1 trillion to shore up giants like Bear Stearns and AIG. Sen. Richard Shelby told Geithner that the administration's proposal "represents a grossly inflated view of the Fed’s expertise," notes Politico.
The aggressive stance against the Fed is a marked change for Capitol Hill, which normally defers to its leadership on financial matters. Some legislators are arguing for a curtailment of the central bank's emergency powers, and fringe elements from left and right have teamed on a bill that would audit the Fed for the first time. But some lawmakers argue that the Obama administration is making the best possible move. "I tend to agree that the Fed is the best answer, though there are no great answers," said Sen. Chuck Schumer.