The Financial Times reports that the House Oversight committee wants to have a little chat with the Fed over the widespread reports that it muscled BofA more than a tad to complete its acquisition of Merrill after the Charlotte bank learned that the securities firm had posted large losses in December and tried to exit the deal.

What is noteworthy about this move is that this is apparently the first time in 20 years that Congress has subpoenaed the Fed. Some will lament the supposed loss of Fed independence, but Willem Buiter has already tagged the Fed as the second least independent major central bank, surpassed only by the Bank of Japan.

As we noted in an earlier post, the Fed began selling out its vaunted independence in the Greenspan era, when the Maestro made nice to the Clinton administration for an unidentified quid pro quo. presumably reappointment as Fed chairman. And Bernanke hasn’t simply been coordinating policy with the Treasury, but has instead acted as an off balance sheet vehicle for the Treasury, enabling it to circumvent budgetary constraints and evade the need for Congressional approval (and oversight too).

So while it is a positive step to see this shot across the Fed’s bow, Congress peculiarly is not going after the elephant in the room, namely the Fed’s increasing role, as Buiter put it, as quasi-fiscal agent of the Treasury.

From the Financial Times: