By Kate Davidson

House Republicans are hopeful that a Trump White House will be sympathetic to their efforts to revamp the Federal Reserve, including measures to subject the central bank to more congressional scrutiny and limit its discretionary powers.

President Donald Trump hasn't said whether he would support the measures, but his own public remarks and those of some of his economic advisers suggest he is skeptical of the Fed's independence and the job it has done steering the economy.

Though the chances of such bills becoming law are higher than they were under the Obama administration, they still would have to get through Congress first. A number of factors could influencewhether and when that happens.

Central-bank legislation appears to be low on the GOP's priority list, which already includes plans to repeal the Affordable Care Act, overhaul the corporate tax code and pass a big infrastructure spending plan. There may be little time left to debate the merits of auditing the Fed's interest-rate decisions or requiring it to follow a rules-based approach to monetary policy.

It also hasn't gotten any easier for legislation to make it through Congress.

While Fed-related measures have broad Republican support in the House, most bills or amendments still require 60 votes to advance in the Senate, and Republicans control two fewer seats than they did previously -- 52 compared with 54 in the last Congress. That means supporters of such legislation would need to convince at least eight Senate Democrats and the entire GOP caucus to support their efforts -- a heavy lift for such a polarizing issue."It's going to be hard for them to do a lot of what they want to do anyway," Andy Laperriere, a policy analyst at research firm Cornerstone Macro, said of the Republican majority.

Recent history has demonstrated, however, there is more than one way to move Fed-related changes through Congress.

Twice in 2015, Republicans attached Fed-related provisions to unrelated bills that Democrats weren't willing to vote against, despite the Fed's opposition.

A law reauthorizing the Terrorism Risk Insurance Program included a requirement requiring the U.S. president to nominate at least one member to the Fed board with community banking experience. Congress also tapped the Fed's capital surplus account to help pay for new federal highway spending, over strong objections from Fed officials who warned such a move would undermine its independence.

Some Republican senators also are considering the possibility of using a special legislative procedure known as budget reconciliation that would allow them to make changes to the 2010 Dodd-Frank law with just a simple majority, rather than a 60-vote super majority. It isn't clear whether such changes would include provisions related to the Fed's monetary policy operations.

Finally, there could be room for some bipartisan compromise on changes to the Fed, such as limiting its emergency lending powers. But that depends greatly on whether those provisions are included in a broader package to overhaul the Dodd-Frank law, which may not win much Democratic support.

Some senior Fed officials think the central bank should pursue changes on its own that would satisfy Republicans' calls for more public information about its deliberations, such as releasing transcripts of its policy meetings sooner than the current five-year lag, or putting more information in its reports to Congress about which rules it has consulted in its interest-rate decisions.

What measures may come up now that Mr. Trump is in the White House? Here are the major legislative proposals that Republicans -- and a few Democrats -- have tried to advance in recent years. Each measure has be reintroduced in the new Congress, which began in January 2017, to be considered.

Audit the Fed

What is it: Legislation to require the Government Accountability Office to audit the Fed's monetary policy decisions. The Fed's financial statements are already audited, and the GAO can examine most other Fed operations, but Congress has long exempted monetary policy decisions from its purview.

Who supports it: Former Rep. Ron Paul had been pushing a version of this legislation for years before his son Sen. Rand Paul (R., Ky.) joined the Senate and took up the cause. It has gained support since the financial crisis among Republicans unhappy with the Fed's actions and its role in the economy.

Whereit stands: Rand Paul and Rep. Thomas Massie (R., Ky.) reintroduced measures in the Senate and House, respectively, in January. The Senate blocked the bill in early 2016 on a vote of 53-44, short of the 60 votes needed to clear a procedural hurdle. The provision was included in a broader bill that passed the House 241-185 on a party-line vote.

What the Fed says: Chairwoman Janet Yellen and other officials oppose the measure, warning it could subject the Fed to political pressure on monetary policy.

The FORM Act

What it is: A main feature of the Fed Oversight Reform and Modernization Act is the so-called Taylor Rule requirement, which would require Fed officials to establish a mathematical formula to guide their interest-rate decisions, and require them to report to Congress if they deviate from the rule. The bill also would allow the GAO to audit the Fed's policy decisions; widen membership of the Fed's rate-setting committee; require the Fed leader to testify four times each year, instead of two; and place new restrictions on the Fed's emergency lending powers; in addition to other provisions related to regulatory policy.

Who supports it: The measure was introduced in the last Congress by Rep. Bill Huizenga (R., Mich.), the former chairman of the House monetary policy subcommittee, and had 20 Republican co-sponsors.

Where it stands: The bill passed the House 241-185 on a party-line vote in the last Congress, but the Senate never voted on it. Rep. Jeb Hensarling (R., Texas), the chairman of the House Financial Services Committee, has said advancing the bill in the current Congress would be a priority.

What the Fed says: Fed officials oppose it. "I believe, and I think most of my colleagues would agree, that we shouldn't mechanically follow that rule or any other rule but that we need to take into account how the economy is performing," Ms. Yellen toldthe House panel in February.

Financial Choice Act

What it is: In addition to the changes that would be required under the FORM Act, the bill would require the Fed's spending on activities unrelated to monetary policy to go through the congressional appropriations process; require the Fed to report to Congress on any negotiations or setting of financial standards with international regulators; and establish a "centennial commission" to study the long-term effects of Fed policy on the economy, and make recommendations to Congress for possible changes to Fed operations, transparency or governance.

Who supports it: Mr. Hensarling introduced the bill in the last Congress.

Where it stands: The House Financial Services Committee approved it, but it never made it to the House floor for a vote last year. It hasn't been reintroduced.

What the Fed says: Because the Fed provisions of this bill are nearly identical to the FORMAct, the Fed has many of the same reservations.

Bailout Prevention Act

What it is: The measure would significantly curtail the Fed's powers to lend to financial firms in an emergency. The 2010 Dodd-Frank law put some restrictions in place, but lawmakers on both sides of the aisle aren't satisfied the Fed has taken the necessary steps to implement those restrictions.

Who supports it: This measure has bipartisan support. Sen. Elizabeth Warren (D., Mass.), one of the Fed's most high-profile critics, introduced a version of the bill in the Senate, and a similar measure was introduced in the House. Republicans and Democrats, including Ms. Warren, signed letters calling on the Fed to toughen up its own rules for lending to banks in an emergency.

Where it stands: Lawmakers haven't held hearings on either bill -- the first step in the process -- but a similar provision was included in the Financial Choice Act, suggesting Republicans are interested in tackling this issue in some way. The measures haven't been reintroduced yet.

What the Fed says: Fed officials oppose it. Fed governor Jerome Powell said in February 2015 that "further restricting or eliminating the Fed's emergency lending authority will not prevent future crises, but it will hinder the Fed's ability to limit the harm from those crises for families and businesses."

Fed Capital Stock

What is it: The measure would require the Fed to pay back billions of dollars in capital that banks paid to be members of the Fed system. The bill was introduced in 2015 after Congress voted to lower the dividend the Fed pays banks on that capital to help pay for federal highway programs.

Who supports it: Former Republican Rep. Randy Neugebauer introduced the measure, which has strong backing from the banking industry, but it isn't clear whether it has any support in the Senate or who may reintroduce it inthe House.

Where it stands: Mr. Neugebauer tried to convince his House colleagues to include the provision in a year-end spending bill in 2015, but it was ultimately left out. He introduced it as a stand-alone bill last year, but it was never taken up by the House Financial Services Committee.

What the Fed says: Fed officials have expressed a variety of concerns about the proposal.

Write to Kate Davidson at kate.davidson@wsj.com

(END) Dow Jones Newswires

February 01, 2017 12:15 ET (17:15 GMT)

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