WASHINGTON — It started more than a quarter-century ago as just another far-out idea from decidedly outside-the-mainstream politician Rep. Ron Paul -- allow detailed congressional audits of some of the most sensitive activities of the Federal Reserve.
For years, his proposal was as unlikely to become law as other longtime quests of the strongly libertarian Texas Republican, such as returning the nation to the gold standard and abolishing the Internal Revenue Service.
But Paul's idea to hold the Fed more accountable has gained traction throughout the financial crisis. On Friday, it moved a clear step closer to reality when the Democratic chairman of the House Financial Services Committee said he would push it forward.
The bill got exposure when Paul ran for the 2008 Republican presidential nomination. Then the Fed became a huge, controversial player in battling the financial crisis, invoking emergency powers to use hundreds of billions of dollars to help engineer the sale of Bear Stearns Cos. and bail out American International Group Inc.
Paul's legislation now has become a rallying point for Republicans and Democrats angry over the bailouts and the Fed's increased and mysterious role in the economy. More than two-thirds of the members of the House of Representatives have signed on as co-sponsors of Paul's "audit the Fed" bill.
The Fed strongly opposes the legislation, saying it would subject its decisions to political influence that could shake market confidence.
The support of Rep. Barney Frank (D-Mass.) gives a major boost to Paul's 26-year push to allow the Government Accountability Office to conduct detailed audits of some of the Fed's crucial activities, such as setting monetary policy and short-term lending to banks through its discount window.
Both actions are couched in various amounts of secrecy: minutes of monetary policy meetings aren't publicly released for three weeks, transcripts are shielded for five years, and banks that borrow through the discount window are never revealed to avoid the perception that they might be in trouble. Federal Reserve officials oppose the legislation, but Frank said he was committed to including it as part of a package of bills to revamp the financial regulatory system.
