OVERNIGHT FINANCE: Banking chairman eyes Fed reform

TOMORROW STARTS TONIGHT: SHELBY EYES FED LEGISLATION. First on The Hill: Senate Banking Committee Chairman Richard Shelby (R-Ala.) doesn't want to the audit the Fed, but that doesn't mean he isn't eying legislation to reform the central bank. Shelby told me that he's "holding hearings to determine where legislation is needed."

-- WHAT SHELBY SAID: "We're going to continue some hearings. We're trying to figure out what we can do, how we can do it and how best to do it... I don't want Congress setting monetary policy."

-- WHY IT MATTERS: Shelby has opposed the "Audit the Fed" proposal from Sen. Rand PaulRandal (Rand) Howard PaulNoisy democracy, or rude people behaving like children? Lawmakers, Wall Street shrug off Trump's escalating Fed attacks Five things to watch for in deteriorating US-Saudi relations MORE (R-Ky.), which would allow for the government to audit the central bank. That proposal has little chance to make its way through Shelby's panel, especially with Shelby and Sen. Bob CorkerRobert (Bob) Phillips CorkerTrump defends 0B US arms sale to Saudi Arabia Cornyn: 'All the money in the world' won't help O'Rourke win Texas Saudi Arabia, Turkey to form joint investigation into Khashoggi disappearance MORE (R-Tenn.), another committee member, opposing the legislation. Still, his increased interest on transparency at the central bank is a clear sign that he'll look to use his gavel to push for reforms at the bank. He said that there is no clear timetable for when he might unveil legislation. Story: http://bit.ly/1B7Y0If

THIS IS OVERNIGHT FINANCE. I'm visiting friends in San Fran this weekend. Where should I go? Tweet: @kevcirilli; email: kcirilli@thehill.com; and subscribe: http://thehill.com/signup/48. Drive safe with this winter weather. Slow down. Be careful. Be diligent. Now let's get back to work...

THE SCENE - - REP. DENNY HECK (D-Wash.), a rising star on the House Financial Services Committee, took the podium at the New Democrat Coalition's presser this afternoon on Capitol Hill. Heck helped to unveil a moderate economic agenda aimed at shifting the party's rhetoric away from Sen. Elizabeth WarrenElizabeth Ann WarrenBiden leads crowded field of Dems in potential 2020 matchup: poll Trump attacks Democrat in Ohio governor's race Warren responds to 'arrogant woman' insult: 'Was I tough on John Kelly? ... You bet I was' MORE's (D-Mass.) demonization of Wall Street and big business.

"I'm beginning to feel like I'm a member of a 12-step program," Heck said. "Hello, I'm Denny and I'm a New Dem."

NEW DEMS UNVEIL ECONOMIC AGENDA, via me: Moderate Democrats unveiled a policy agenda Wednesday as part of a larger effort to move the party back toward the middle in 2016. The New Democrat Coalition, a caucus of moderate House Democrats, unveiled its economic proposal -- the first of its kind in its nearly 18-year history. It comes as some Democrats have called for a change in tone from what they say is Sen. Elizabeth Warren's (D-Mass.) demonization of the business community. http://bit.ly/1M6lJvj

MY TAKE: It's light on policy specifics, but the tone is what is getting Warren-wingers chatting...

It's Wednesday, let's drink...

SHOT, via ADAM GREEN, co-founder of the Progressive Change Campaign Committee: "New Democrats are Wall Street Democrats. They are the Bad News Bears of American politics -- peddling a losing agenda of less funding for middle-class priorities and more tax cuts for big corporations at a moment when Americans are sick of a system rigged for the big guy against the little guy."

CHASER, via a source close to the New Dem coalition: "The PCCC gets almost everything precisely backwards. Democrats are in the minority because the brand of the party was too far left for moderates to win... If Democrats follow this agenda -- one that Nancy Pelosi called 'a bold plan for the future of our country' -- they could be back on the path to majorities. If they follow the PCCC, they will sink further into minority status and irrelevance."

Back to the Fed...

FED TRANSCRIPTS RELEASED... WORRIED ABOUT LIMITS TO POWER. The Wall Street Journal has a great recap of the takeaways from the 2009 Fed transcripts that were released today. Here's what stood out: "Chicago Fed President Charles Evans was unconvinced in September 2009 that the central bank could do much more to stimulate the economy. 'Given the limitations I see in our effectiveness at this point, I think we're at a pretty good position, and I don't think that we can really do that much more,' he said. Then-Fed Chairman Ben Bernanke echoed that view later in the meeting, saying 'it's not obvious that we do have a lot of ammunition left.' This skepticism helps explain the Fed's qualms about enlarging their bond-buying program." http://on.wsj.com/1NhKcRO

CFPB WATCH - - WORTH NOTING: Rep. Randy Neugebauer (R-Texas) formally introduced his legislation that would restructure the Consumer Financial Protection Bureau on Wednesday. He nabbed 20 original co-sponsors, all GOPers. The bill is a long-shot and is vehemently opposed by the left, who argue that it would undermine the agency. The bill would structure the CFPB, replacing its director position with a five-person commission. 

-- BIZ BACKS RANDY'S BILL: In a letter of support, here are some of the groups wanting to get Neugebauer's bill over the finish line: American Bankers Association, American Financial Services Association, Consumer Bankers Association, Credit Union National Association, Financial Services Roundtable, Independent Community Bankers of America, National Association of Federal Credit Unions, U.S. Chamber of Commerce.

ICYMI (like we did) -- CORDRAY VERSUS WAGNER. Rep. Ann Wagner (R-Mo.) got into it with CFPB Director Richard Cordray at Tuesday's hearing about which agency official signed off on their $215 million headquarters renovations. "Why does that matter to you?" Cordray asked. Wagner looked shocked at the answer. She then tossed her paper on the table while responding, "Because it's $215 million of the taxpayers' money." Watch the clip: http://bit.ly/1BIS2zx

WAS WARREN BUFFETT SEXIST TO CALL ELIZABETH WARREN 'ANGRY?' MSNBC Morning Joe host Mika Brzezinski said on the program: "I think that's sexist. I think it's preposterous. I think her message is angry because the middle class are angry in this country. And she is tapping into something that they feel and she's also extremely nice when she's talking to people about this as well."

-- Jeffrey Walker, chair of the Department of Rhetoric and Writing at the University of Texas at Austin, also called Warren "angry" in an interview with Time examining Warren's rhetoric: "She projects an attitude of indignation and anger and wants the audience to gin up their emotion about this issue. The phrasing and the tone of voice and the hand gestures all contribute to a sense of her being angry, but it doesn't seem artificial."

MARKETWATCH: Elizabeth Warren's odds at being president are 18 to 1. http://on.mktw.net/18kzSI1

SIGNED: DHS bill. Ben Kamisar: "President Obama on Wednesday signed a bill on Wednesday that fully funds the Department of Homeland Security (DHS) through September, ending the threat of a partial government shutdown." http://bit.ly/1EmYI6F

GOP TURNS UP HEAT ON IRS EMAILS... Just in time for tax season. Bernie Becker for The Hill: "Congressional Republicans are turning up the heat on the IRS to hand over emails with the White House, as they continue their investigation into the agency's improper scrutiny of Tea Party groups. Senate Finance Chairman Orrin HatchOrrin Grant HatchRomney defends Trump’s policies as ‘effective,' disputes he led 'never Trump' movement GOP fractured over filling Supreme Court vacancies in 2020 George W. Bush, Mitt Romney to visit Arizona to boost Martha McSally MORE (R-Utah) and House Ways and Means Chairman Paul RyanPaul Davis RyanMcCarthy introduces bill to fully fund Trump's border wall On The Money: McCarthy offers bill to fully fund Trump border wall | US to press China on currency in trade talks | Mnuchin plans to go ahead with Saudi trip | How America's urban-rural divide is changing the Dems Election Countdown: Minnesota Dems worry Ellison allegations could cost them key race | Dems struggle to mobilize Latino voters | Takeaways from Tennessee Senate debate | Poll puts Cruz up 9 in Texas MORE (R-Wis.) said they were going back to the IRS after the White House brushed aside GOP requests for emails." http://bit.ly/1wIAW4f

-- RUBIO UNVEILS TAX PLAN, via Becker: "Sen. Marco RubioMarco Antonio RubioSenators pledge action on Saudi journalist’s disappearance Senators concerned as Trump official disputes UN climate change warning Rubio: Response to death of Saudi journalist 'can't be symbolic' MORE (R-Fla.) unveiled his tax reform plan Wednesday, arguing that Congress doesn't have to choose between helping families and giving the economy a boost. The pitch to the middle class and effort to boost his policy chops comes ahead of a possible 2016 White House bid for the first-term senator. Rubio, who crafted his tax plan with Sen. Mike LeeMichael (Mike) Shumway LeeSenators pledge action on Saudi journalist’s disappearance Bernie Sanders: US should pull out of war in Yemen if Saudis killed journalist Senators warn Trump that Saudi relationship is on the line MORE (R-Utah), said that their proposal to revamp the individual tax system would give an assist to families, while business reforms would help grow the economy." http://bit.ly/1BT6S80

WILL OBAMA USE EXEC ORDER ON TAXES? Pete Schroeder: "The Obama administration is not ruling out using executive powers to also address the tax code. With Senate Democrats openly pushing the administration to take its own action on the tax front, the White House is not shooting down the idea." http://bit.ly/1BHI9lv

SECTORS WEAKENED BY STRONG DOLLAR, LOW OIL. Gregg Robb on the beige book for MarketWatch: "Lower oil prices and the stronger dollar were weighing on manufacturing, agriculture and energy exploration in many regions of the country, according to the latest report on current economic conditions. The U.S. central bank report, known as the Beige Book, found that manufacturers in Boston, Cleveland, and Chicago, and the farm sector in Texas and California were struggling to adjust to weaker demand for their exports due to the high value of the greenback."

PENSION FUND WATCH, via Randall Smith for The New York Times: "More individuals are pouring money into so-called passive investing or index funds, which aim to match the performance of the main stock and bond markets, but larger institutions like pension funds and endowments have been slower to follow suit, despite the potential for higher returns and lower fees. These bigger institutions still tend to rely on an army of asset managers and consultants who charge higher fees but promise better returns through so-called alternative investments like private equity and hedge funds. But many of these investments do no better -- or even worse -- than index funds, opponents say." http://nyti.ms/1GlfMMs

PARTING SHOT: FED TRANSPARENCY. Think it's just the far right that is criticizing Fed transparency? Think again. The editorial board of Bloomberg View offered a blistering critique of the Fed's transparency. Think about it: SIX YEARS after the collapse, the central bank releases transcripts. 

"Such details -- as well as those from the darkest days of the financial crisis in 2008 -- might have been more useful if they'd come out sooner. Congress may have benefited by reading them, for example, when it was crafting the Dodd-Frank financial reform legislation. Lawmakers would have had greater insight into how concerns about the banking system complicated the Fed's efforts to revive the economy, and might thus have done more to ensure banks' resilience.

"Why is the wait so long? Fed officials worry that if they know their conversations will soon be published, they will be hesitant to speak candidly. They may be afraid of political repercussions or the possibility that they will reveal confidential information. And that would chill much-needed debate and possibly compromise the Fed's crucial independence. This argument has some merit, but it's hard to see why the lag in publishing has to be as long as five years...

"The Fed should be as transparent as prudence allows. Releasing transcripts more quickly -- while events are still fresh, so we can learn from experience -- would be an easy step in the right direction." http://bv.ms/1B3thNR


Write us with tips, suggestions and news:  vneedham@thehill.compschroeder@thehill.combbecker@thehill.com; rshabad@thehill.com; kcirilli@thehill.com.

--Follow us on Twitter: @VickofTheHill@PeteSchroeder@BernieBecker3; @RebeccaShabad and @kevcirilli.