The secretive Federal Reserve, former lair of “masters of the universe” like Alan Greenspan and Tim Geithner and current engine of a Wall-Street-first, Main-Street-last “recovery,” is being set up by the Obama administration and Congressional leaders to get more powers.

That’s a bad idea.

But it will be made a little less bad if Congress establishes some oversight over the largely-unaccountable institution.

On Thursday, oversight won. An amendment to audit the Fed, which was modeled on a proposal long advocated by Congressman Ron Paul, R-Texas, and Congressman Alan Grayson, D-Florida, was approved on a 43-26 vote by the House Financial Services Committee.

The amendment, which was proposed on the committee by Paul and Grayson, would:

* Remove blanket restrictions on General Accounting Office audits of the Fed

* Allow auditing of every item on the Fed¡¯s balance sheet, including all credit facilities and all securities purchase programs.

A very moderate proposal, the amendment retains a limited audit exemption on the Fed’s unreleased transcripts and minutes and sets a 180-day time lag before details of the institution’s market actions may be released — both of which provide Fed governors with all the space and flexibility they might need to act in moments of economic emergency.

The amendment also notes that the approval of auditing should not be construed as interference in or dictation of monetary policy by Congress or the GAO.

In other words, this is about simple transparency, which everyone should favor.

Unfortunately, not everyone is ready to hold the Fed to account.

Democratic leaders in the House, including Financial Services Committee chair Barney Frank, D-Massachusetts, tried to scuttle the “Audit the Fed” proposal.

It would be fair to ask: What parallel universe have we entered where Democrats are the prime defenders of bad bankers and bad practices?

But, luckily, not all Democrats have gone astray.

When the committee vote came, it broke down like this:

Chairman Frank and 25 committee Democrats voted against auditing the Fed.

Grayson and 14 committee Democrats joined 28 Republicans in voting “yes” for transparency and a measure of accountability.

The Paul-Grayson amendment now becomes part of HR 3996, Frank’s “Financial Stability Improvement Act of 2009.”

That bill, which was expected to gain a vote this week, will not be considered until after the Thanksgiving break.

That’s because Frank’s rush to win approval for this legislation is being slowed not merely by those who would audit the Fed but also by those who say that Congress must get more serious about addressing real-economy concerns — particularly unemployment in the African-American community.

The delay in consideration of the Financial Stability Improvement Act is entirely appropriate, even if Frank and his staff are grumbling about it. Over the next week or so, Frank will work with members of the Congressional Black Caucus to address concerns about the failure of the Obama administration and congressional leaders to respond aggressively, or effectively, to high unemployment and other economic challenges in African-American neighborhoods.

Congresswoman Maxine Waters, a California Democrat who is the senior CBC member on the committee, is a prime mover in the effort to get Congress to pay more attention to real-economy concerns. Waters and other CBC members have been meeting with keys figures in the Obama administration and the congressional leadership to argue that more must be done to ease constraints on credit, address foreclosure threats and focus intensely on job creation — especially in areas that have long been neglected.

The Financial Services Committee is not the only place where these issues can or should be addressed. Indeed, as a Frank spokesperson said of gteh CBC members, “They said that they weren’t going to support the bill (Thursday) because of issues absolutely unrelated to the bill — larger economic issues facing the African American community — so we put off the vote to give the time for the administration, leadership and the CBC to work those issues out.”

But Waters was blunt, and correct, about the importance of focusing attention on the need for the administration and the Congress to pause in the rush to address the challenges of the banks and the financial services industry to ponder the condition of those Americans who have suffered most from not just an economic downturn but the neglect of government: “The recession has created a unique systemic risk that threatens all parts of the African-American community, including the poor and the middle class. I have always been committed to addressing that risk and will continue to do so. This is a critical issue for my constituents.”

In fact, the real-economy issues being raised by Waters and her colleagues are critical for out-of-work and foreclosure-threatened Americans across the country. To the extent that the rebellion she has fomented focuses attention on the urgency of a response to rising unemployment and other challenges facing urban communities, the Congress and the country will be well served by this delay.

And if the final legislation that comes out of the Financial Services Committee holds the Fed to account and better serves the interests of poor and working-class Americans, then the battles on this particular committee might just be the start of a long-overdue redirection of an economic debate that has well served bankers and speculators while ill serving the rest of us.