The House approved the Fed Oversight Reform and Modernization Act in a 241 to 185 vote thanks to overwhelming Republican support.

The bill is a sign of the deep suspicion many Republican lawmakers hold against the U.S. central bank, which played a major role in America's policy response to fight the 2007-09 recession.

Conservative lawmakers worry the Fed's policies, which included pumping trillions of dollars into the banking system and slashing its benchmark interest rate to near zero, could inflate bubbles in the economy and lead to high inflation.

The proposal now passes to the Senate where Obama's Democrats have the ability to stop most legislation despite being in the minority. It has nonetheless prompted a host of Fed policymakers to air their concerns.

Fed Chair Janet Yellen said this week the bill would severely damage the U.S. economy and curtail Fed independence. The Obama administration opposes the proposal because it believes it would hinder the Fed's ability to fight recessions.