The shift in tone was subtle, but there was no doubt that the relationship between Congress and the Federal Reserve is changing, with more Hill demands for openness. Bernanke seemed to acknowledge that in advance, at least indirectly, by penning an op-ed in the Wall Street Journal defending his handling of the financial crisis and reaffirming his pledge to keep inflation in check.
Still, when Bernanke appeared before the House Financial Services Committee for his semiannual briefing on the economy, more Congressmen seemed willing to challenge him across a range of issues including whether the Fed's powers should be expanded, as President Obama has proposed.
The top Republican on the committee, Rep. Spencer Bachus (D-AL) said, "Republicans believe that the Fed's core mission will be seriously undermined" by expansion of its regulatory authority.
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Rep. Ron Paul (R-TX) pressed his argument that the Fed should be more open to audits of its discussion and decision-making in setting interest rates. He said when the Fed insists on independence. it means, don't let Congress know what's going on. Bernanke held his ground. He told Paul and others that audits of monetary policy formation would result in higher interest rates demanded by a bond market suspicious of political meddling .
The economy wasn't ignored. In a hearing that goes for three hours there's room for discussion of all the major issues: When the recession will end, the risk of inflation down the road, the impact of higher federal budget deficits and how much rising unemployment will add to home foreclosures. And, the threat of large bankruptcies in commercial real estate.
In the end, no new ground was broken as both sides continue to stake out their position. Bernanke said giving the Fed a larger role in financial regulation is merely "a modest reorientation of the current system." No one believes that. The debate will go forward. As one Republican said, "It's easier for Congress to find out more about the CIA than the Fed."
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