THE Federal Reserve has ventured ever further into the political realm, propping up failing companies, lending to industries other than banks and financing the federal budget through purchases of Treasury bonds. Now the politicians are threatening to respond in kind.

By law, the Fed is independent. The president and Congress can do no more than name its seven governors, including the chairman. The governors share responsibility for monetary policy with presidents of the 12 reserve banks which are supervised by the board; these presidents are appointed by their banks' boards and confirmed by the governors.

That Congress may not audit the Fed or approve its budget provides an added element of security. But that may now be at risk. “The role of the Fed has changed dramatically, so the usual defence of, well, we shouldn't intrude in the integrity and independence of the Fed, I think, no longer applies,” said Max Baucus, chairman of the Senate Finance Committee, on March 31st. Gene Dodaro, who heads the Government Accountability Office (GAO), Congress's investigative arm, complained that his ability to monitor federal support for the financial system is hamstrung because the GAO cannot audit the Fed's monetary-policy or lending operations.

Two days later, when the Senate voted for a federal-budget outline, it included a non-binding resolution giving the Senate authority to audit the Fed and requiring the central bank to disclose the name of anyone to whom it lends. A less draconian resolution requires the Fed to describe its collateral at regular intervals and calls for an “evaluation” of the Fed's reserve banks. Congress has often targeted these banks, whose presidents are more likely to vote for higher interest rates than the governors. Even friends of the Fed question the usefulness of the 12 banks and their geographical distribution, which reflects the country's political make-up in 1913.

When viewed in isolation, the resolutions do not amount to much, since they do not aim to intrude on monetary policy and are not binding. Carrying them out would require a change in the law which is unlikely for now. The Fed itself has begun a “top-to-bottom” review aimed at boosting its transparency, although it is highly unlikely to agree to name borrowers. A possible alternative to giving the GAO auditing authority would be giving more powers to the Fed's own inspector-general.

The latest actions are troubling nonetheless. The Fed's interventions have been defensible given the scale of the crisis and lack of alternatives, but they have exposed it to public anger over bail-outs for bankers. Tim Geithner, the treasury secretary, owes his recent problems in part to having overseen the bail-out of American International Group, an insurer, in his previous job as head of the New York Fed.

The controversy also comes at a delicate moment for the Fed. Two governors' seats are vacant and Ben Bernanke's four-year term as chairman ends next January. The Fed also needs favours from Congress: it would like authority to issue debt securities to soak up the excess liquidity its rescue operations have created, or for the Treasury to have authority on its behalf. The Treasury is seeking to revamp financial rules and give the Fed more sway over the financial system. Hostile congressmen could seize on such initiatives to impose changes that the Fed doesn't want.

As if to pre-empt threats to its independence, the central bank and the Treasury released a joint statement last month affirming their shared responsibility for financial stability and the Fed's sole responsibility for monetary policy. It was meant to be reassuring, but it mostly served to emphasise how much the Fed has become entangled in fiscal and financial policy.