GOP reaction to Fed efforts to boost Europe mixed

Republicans, critical of recent moves by the Federal Reserve, were mixed in their reaction to the Fed’s recent efforts to boost European banks.

After the Fed announced Wednesday that it was joining with other central banks to lower the cost of exchanging dollars for other currencies, House Financial Services Committee Chairman Spencer Bachus (R-Ala.) was generally supportive. He argued that the U.S. economy is not immune from Europe’s woes, given the interconnectedness of the global economy.

{mosads}The Fed’s move effectively halves how much it charges for central banks, including the European Central Bank (ECB), to swap currencies for dollars, which are then passed on to banks starved for liquidity. Bachus said that given America’s close economic ties to Europe, the nation has an interest in supporting the continent.

“We must consider not only our own actions but the actions of other policymakers as we work to advance America’s economic interests,” he said in a news release. “Particularly in the case of Europe, it is in our national interest to see that region recover.”

He emphasized, however, that continued support for Europe from the United States should be contingent on European policymakers shoring up their nations’ finances, which he attributed to a number of issues, including “profligate government spending” and generous retirement benefits.

“Today’s central bank action should not and cannot absolve European policymakers from the need to resolve their own problems,” he said. “If the U.S. is to continue to support Europe, then Europeans must be willing to make the same kind of painful choices to reflect today’s economic reality.”

But Republicans were not united in support of the move. Rep. Allen West (R-Fla.), an outspoken conservative freshman, blasted the decision on Twitter, jabbing at the president for the Fed’s decision.

“Obama decides to give discounted interest rate loan to bail out Europe. R we printing more $ or borrowing to do it? Who will bail us out?,” he tweeted.

While Obama reappointed Fed Chairman Ben Bernanke to his position after taking office — he was originally selected by President George W. Bush — the Fed is not an agency of the White House, and is politically independent.

Republicans have keyed in on the Fed in recent months, blasting its recent attempts to boost the economy as sowing the seeds of inflation and doing more harm than good. Before the central bank met and decided to reorient its portfolio in a bid to further lower borrowing costs, GOP leaders urged in a letter for the Fed to resist further action. GOP presidential candidates have also gotten in on the Fed bashing, most notably Texas Gov. Rick Perry, who suggested Bernanke was “almost treasonous” in recent policy decisions.