To my knowledge, no one has proposed waterboarding the US Federal Reserve. But the hostile reaction of much of the country's political leadership to suggestions that the Government Accountability Office (GAO) audit the Federal Reserve Board might lead people to think that waterboarding was being called for.

The basic story is straightforward. The US Congress has lent more than $700bn, via the Treasury, to bankers at below market interest rates through the troubled assets relief programme, or Tarp. This was to keep the banks from going belly up. At the same time, the Fed has lent more than $2 trillion to banks and non-financial institutions to maintain liquidity in the financial system.

The congressional oversight panel, led by Elizabeth Warren, has frequently complained that the Treasury has not always been altogether forthcoming in providing information about its lending practices under the Tarp. However, there is at least a public paper trail. We can find out how much money each bank received and under what terms.

By contrast, there is no public paper trail for the Fed's loans, even though it has more than three times as much money outstanding as does the Treasury through the Tarp. The Fed has only provided aggregate information on the amount of loans in each of its various lending programs, and general information on the terms of the loans and the types of collateral received.

However, it is not possible to find out in detail how much money Goldman Sachs borrowed, for example, at what interest rate, and which assets it posted as collateral. The Fed has explicitly refused to make information about specific borrowers public. In fact, the inspector general who has the responsibility for overseeing the Fed told congress that she does not have this information. Apparently the Fed doesn't even trust its inspector general with information on its lending practices.

It is difficult to understand the rationale for this secrecy. There may be times where it is necessary for America's central bank to lend money to a bank without immediately making the information public in order to avoid a panic. However, it is difficult to understand why this information cannot be made available weeks or even months later. After all, this money does not belong to the Fed – it belongs to us.

The proposal for a GAO audit of the Fed is a first step towards reasserting democratic control over this institution. In many respects, the Fed has more direct control over the direction of the economy than the president or congress, yet it carries through its actions largely outside of the public's view.

Furthermore, it is structured so that the banks have a hugely disproportionate influence over the Fed's actions. The Fed's 12 district bank presidents are appointed through a process dominated by the banks within each district. These 12 presidents sit on the Federal Open Market Committee (FOMC), the Fed's key decision-making body on monetary policy, far outnumbering the seven governors who are appointed through the democratic process. (Only five of the 12 bank presidents are voting members of the FOMC. The president of the New York Fed is always a voting member. The other 4 voting positions rotate among the other 11 districts.)

In a democracy, it is difficult to justify a situation in which the most important economic policy making body is, by design, more answerable to the banking industry than democratically elected officials. The Federal Reserve Transparency Act is a step toward making the Fed accountable. It would simply require that the Government Accountability Office audit the Fed's books and report to Congress on the bailout and other issues.

While more than 130 Republican members of the House of Representatives have signed on as co-sponsors of the bill, just over 30 Democratic members are co-sponsors. No one in the Democratic leadership has signed onto the bill. It is difficult to reconcile the Democrats' position with President Obama's often- repeated commitment to transparency. The resistance to transparency at the Fed will only encourage the public to believe that there actually is something to hide.

The Fed bears primary responsibility for the economic collapse. Alan Greenspan failed to take any steps to rein in the housing bubble and arguably even promoted it. It was inevitable that the collapse of an $8tn bubble would lead to a serious downturn of the sort that we are now seeing.

This incredible failure of the Fed should raise fundamental questions about its structure. Certainly it would be a positive step if the Fed were more answerable to democratically-elected officials and less accountable to Wall Street bankers. A GAO audit would be a big step in the right direction.