Ron Paul: Fed not doing 'a very good job'

Fed-watchers may have been following Chairman Ben Bernanke's testimony before the House Budget Committee Wednesday morning, but Fed-bashers were following Paul's hearing just as intently. The Tea Party favorite has been a longtime critic of the Fed, arguing it should be abolished.

Other Republican lawmakers have recently joined Paul's Fed criticism, albeit on a narrower basis. Several Republicans have warned that the Fed's new policy of buying up $600 billion of Treasury bonds will not boost the economy as the central bank hopes, but rather will lead to high inflation. Foreign officials, in particular from China, have also criticized the policy, saying it would devalue the dollar, which serves as the world's reserve currency.

But Rep. Barney Frank (D-Mass.), who serves as ranking member of the full Financial Services Committee, did his best to steal the spotlight from Paul, offering a quip to rebut China's criticisms.

"Being accused of currency manipulation by the People's Republic of China is like getting a lecture on family planning from the Octomom," he said in his opening statement, adding that China has a "serious and systemic" practice of manipulating its own currency. He left the hearing shortly thereafter.

The hearing indicated that the debate on the Fed could break down along partisan lines in the 112th Congress. Several Republicans attending the hearing offered critiques of the central bank, while Democrats struck back.

Rep. Blaine Leutkenmeyer (R-Mo.) suggested the Fed has "mismanaged the situation," given that, despite its mission to boost employment, joblessness continued to linger around 9 percent.

And Rep. Frank Lucas (R-Okla.) said that the Fed's inability to see and prevent the housing bubble does not bode well for its capacity to stave off inflation.

"If they didn't see this mess coming, will they see the inflation cycle starting up in time ... to turn off the printing press?" he said.

However, Rep. Lacy Clay (D-Mo.), the ranking member on the panel, said GOP criticisms of the Fed's policies are "absolutely wrong."

"I never thought I would see the day when allegedly conservative members of the Republican Party would side with the People's Republic of China over the best advice of the chairman of the Federal Reserve," he added.