Now that the public is slowly starting to understand the source of many of the booms and busts in history – the Federal Reserve – pressure has been mounting on House Financial Services chairman Barney Frank to bring the bill introduced by Texas Rep. Ron Paul out of his committee and allow a vote on it.

Today Barney Frank announced that he expects the bill to pass out of committee sometime in October, and it should pass and change the existing laws which forbid the Government Accountability Office from auditing the Fed in any meaningful or full manner. Once the audits begin, they would then be made available to the public for reading and inspection.

H.R. 1207 was introduced by Ron Paul ‘To amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported, and for other purposes.’

So far the bill has attracted 282 co-sponsors, again, indicating the political pressure from Americans who want accountability and the almost limitless monetary power of the Federal Reserve reined in – at minimum.

While this is good news, there is an unfortunate caveat to it all, and that is it may be attached to a larger regulaton package which the Obama Administration has been trying to pass since early 2009.

Here is what Barney Frank said about the bill at a town meeting taken from the video:

“I have been pushing for more openness from the Fed. I want to restrict the powers of the Federal Reserve. First of all, the Fed will be the major losers of power if we are successful, as I believe we will be, setting up a financial product protection commission. The Federal Reserve is now charged with protecting consumers. They were supposed to do subprime mortgage restrictions.

Congress in 1994 gave the Fed powers to ban subprime mortgages. Alan Greenspan refused to do it. They had the power to ban credit card abuses. Under Greenspan they did nothing. Under Bernanke they started but only after Congress acted.That’s one of the reasons why in the new consumer protection agency, we will take away from the Federal reserve the power to go consumer protection.

Secondly, they have has since 1932 a right under Herbert Hoover to intervene in the economy whenever they could. Last September, the Federal Reserve they were going to advance $82 billion to AIG. I was kind of surprised and said, ‘Mr Bernanke do you have $82 billion?’ Mr. Bernanke replied, ‘I have $800 billion and under section 13.3 of the Federal Reserve Act they can lend anything they want.’

We are going to curtail that lending power. We are going to put some restrictions on it.

Finally we will subject them to a complete audit. I have been working with Ron Paul, who is the main sponsor of that bill. He agrees that we don’t want to have the audit appear as if influences monetary policy as that would be inflationary.

One of the things the audit will show you is what the Federal Reserve buys itself. And that will be made public, but not instantly because if it was made instantly people would be trading off it, so the data would be released after a time period of several months, enough time so it will not be market sensitive. This will probably pass in October.”

Watch the Video on YouTube: