With most Americans outraged over the behavior of the Federal Reserve and the part it has played in the bailouts of huge institutions in the financial and automotive industries, Ron Paul introduced H.R. 1207, which would have required a full audit of the Federal Reserve and its activities, which crosses international lines.

According to Rep. Ron Paul, R-Texas, the House Financial Service Committee’s panel on domestic monetary policy, Rep. Mel Watt, D-N.C., essentially stripped the bill of just about everything that would have required transparency, and pretty much is now worthless as to its original purpose of letting the American people and Congress see what their secretive dealings have entailed.

After Watt got hold of the bill, it no longer includes the communications reports between the reserve banks and its various workers, and also the Board. What was especially wanted to be seen was what types of deals were made with foreign central banks and how recent bailout money was spent and what banks received it and how much. Paul asserts those loopholes, which had been closed in the original language of the bill, are now reopened.

Citing a telephone interview with Paul, Bloomberg reported Paul said about the revised bill: “There’s nothing left; it’s been gutted. This is not a partisan issue. People all over the country want to know what the Fed is up to, and this legislation was supposed to help them do that.”

Especially troubling about the gutting of the bill is the connections the Democrat Watt has with the banking industry. Bank of America (NYSE:BAC) has its headquarters in his congressional district, which is based in Charlotte, but worse, the majority of contributions to Watt’s campaign has come from corporations in the real estate, finance and insurance industry.

Watt’s largest contributors included American Express (NYSE: AXP), Wachovia, Bank of America and the American Bankers Association. Altogether the financial industry donated over $217,109 to Watt, which was over 35 percent of the overall contributions he received.

Paul’s bill had widespread support, with over 300 co-sponsors in the house. Per Bloomberg, Paul says he plans on introducing an amendment to the bill which would bring it back to the original language it included at the time it comes to the floor of the House to be voted on.