Audit the Fed? Bernanke fights back against Ron Paul

Federal Reserve Chairman Ben Bernanke (right) called Ron Paul's 'Audit the Fed' bill a 'nightmare scenario' Wednesday.

NEW YORK (CNNMoney) -- In what is likely to be the last showdown between Ron Paul and Ben Bernanke, the Federal Reserve Chairman once again fought back against the Congressman's calls to audit the Federal Reserve.

Rep. Paul, a Republican from Texas and author of "End the Fed", has been trying for years to pass a law that would give Congress the ability to examine the central bank's decision-making process.

Now, he's closer than ever before, after his colleagues voted last month to finally take up his bill on the House floor. The vote is expected to happen next week.

It's important though not to confuse the aim of the bill with a financial audit. The Federal Reserve's finances are already audited every year by an independent accounting firm. (Last year it was Deloitte and Touche). The central bank also publishes its balance sheet every Thursday online.

Instead, what Paul is aiming for is a full investigation of the way the Fed determines monetary policy.

Those deliberations currently take place behind closed doors. Minutes are released with a three-week lag, and full transcripts are published only five years after the fact.

Bernanke, speaking at a hearing about the economy and monetary policy Wednesday, said he prefers to keep it that way to protect the Fed's independence. Having Congressional investigators in the room could "create a political influence" and have a "chilling effect," the Chairman said.

Bernanke said he could envision a "nightmare scenario" where Congress would disagree with a Fed decision on interest rates and try to get other agencies, such as the Government Accountability Office, to review it.

Current law also protects the Federal Reserve from audits that reveal transactions with foreign central banks and governments, the reserves of its member banks and discussions among its employees about these issues.

Reforming, or even abolishing the Fed has been one of Paul's top priorities. But Paul, who has served over 24 years in Congress, has indicated he plans to retire when his current term ends later this year. One of his colleagues even joked about Paul's battles with Bernanke.

"His leadership on the committee, especially during these hearings when we've had the Federal Reserve chairman up here before us, have certainly made the hearings more interesting and provided several memorable YouTube moments," Rep. Spencer Bachus said.

In the remainder of the hearing Wednesday, Bernanke reiterated his gloomy outlook for the economy and urged lawmakers to act now to boost growth and the job market in particular. Much of his testimony echoed similar comments before the Senate Banking committee a day earlier.