Speaking to the National Association for Business Economics on Monday, the President of the Richmond Federal Reserve Bank expressed his fears about the Fed’s recent and current emergency financial aid actions. Specifically, President Jeffrey Lacker mentioned how the Fed may have opened its doors to unwanted political pressures by stepping in last year to provide private corporations with capital to keep the markets moving.

“Using the Fed’s balance sheet is at times the path of least resistance, because it allows government lending to circumvent the congressional approval process,” Lacker said.

“This risks entangling the Fed in attempts to influence credit allocation, thereby exposing monetary policy to political pressure,” he told the Association.

Lacker also underscored the risks associated with the inevitability of cutting the funding to these struggling banks and lenders.

“At some point in the future, the Fed will need to withdraw monetary stimulus to prevent a resurgence of inflation when the economy begins to recover,” he said.

“That time could arrive before credit markets are deemed to be fully enough ‘healed’… If monetary policy and credit programs remain tied together, as they currently are, we risk having to terminate a credit program abruptly, or else compromise on our inflation objective,” Lacker said.

At the past meeting of the Federal Open Market Committee, Lacker, a voting member of the board this year, dissented against the Fed’s decision to continue to spend billions of government money on propping up failing financial institutions. His solution was to provide more market liquidity through the purchase of more U.S. Treasury securities.

In his Monday speech, Lacker called on the Fed to let the U.S. Treasury Department take on the lending role, as it is always required to have official approval from Congress. Letting the Treasury take over would, according to Lacker, allow the Federal Reserve to maintain its long-time held and treasured independence from legislation.