GOP Leaders Urge Fed to Remain on Sidelines, Dems Cry Foul

Congressional Republican leaders, in a rare move, sent a letter to the Federal Reserve urging its chairman, Ben Bernanke, not to intervene in the U.S. economy with further "monetary stimulus proposals," given that they feel the central bank's actions to date have not spurred a recovery.

"Respectfully, we submit that the board should resist further extraordinary intervention in the U.S. economy, particularly without clear articulation of the goals of such a policy, direction for success, ample data proving a case for economic action and quantifiable benefits to the American people," reads the letter signed by House Speaker John Boehner, R-Ohio, Senate Minority Leader Mitch McConnell, R-Ky, and their respective deputies, Sen. Jon Kyl of Arizona and Virginia's Eric Cantor.

It comes as the Federal Reserves begins a two-day meeting in Washington to examine ways to boost the flagging U.S. economy and bleak jobless picture.

Republicans have made no secret they strongly disagree with the Fed's recent policy of "quantitative easing," a policy employed by the central bank to increase the monetary supply with interest rates at or near zero.

But Democrats immediately cried foul, saying Republicans had no business pressuring an independent agency that was designed to be free from political influence.

"This is a heavyhanded attempt to meddle in the Fed's independent stewardship of monetary policy," accused Sen. Chuck Schumer, D-NY.

The Assistant Democratic Leader, Dick Durbin of Illinois, in a Senate floor speech said, "This morning we learned that the Republican leaders of the House of Representatives and the United States Senate have done something which may be unprecedented. We are searching for some example in the past when this has occurred."

But one GOP aide to McConnell sent to Fox a November 2010 letter to Bernanke signed by the same four GOP leaders in which they express "our deep concerns over the recent announcement that the Federal Reserve will purchase additional U.S. Treasury bonds."

The same aide dismissed Democratic concerns that Republicans are exerting inappropriate pressure. "There are no demands made in the letter," the aide noted.

That said, Republicans did find a letter sent by Durbin to Bernanke in February of this year related to interchange fees, a controversial topic on which Durbin was a central player in lowering the per transaction swipe fees businesses have to pay for credit card use by its customers.

In the Durbin letter, he admonishes the Fed chairman, saying, "I was disappointed that your testimony about interchange fee reform ...echoed the financial industry's talking points."

Durbin rebuts what he calls the banking industry's "scare tactics," as the industry fought hard against the reforms Congress passed. And the leader urged action from Bernanke.

"I urge you and the Federal Reserve to recognize these tactics for what they are, and to carry out the implementation of interchange reform as Congress intended - on the basis of facts and not the financial industry's fictions," Durbin said, adding, "For the sake of Main Street American consumers and businesses, we need the Federal Reserve to understand and address the non-competitive practices of our largest financial institutions."

But Max Gleischman disputed any comparison to what GOP leaders did Tuesday.

"That's an apples to bowling balls comparison," Gleischman e-mailed to Fox, adding, "Durbin's letter to Bernanke was to correct public remarks the Chairman made about a law Durbin wrote and Congress passed. Correcting the record about legislation and attempting to influence monetary policies are two very, very different things."