The Federal Reserve is willing to work with U.S. lawmakers on ways to release names of companies that borrow from the central bank after a time lag so the disclosures do not disrupt markets, a Fed official said.

Scott Alvarez, the Fed's general counsel, told the House of Representatives Financial Services Committee on Friday that the idea was something that we're giving serious consideration with and we'd be happy to work with you on.

Alvarez, testifying on proposed legislation that would subject the Fed to audits by the Government Accountability Office, said that allowing reviews of the Fed's monetary policy deliberations would undermine the U.S. central bank's independence and credibility.

The GAO is the investigative arm of Congress.

But he was asked by the committee's chairman, Rep. Barney Frank, if the Fed would cooperate on changes to the legislation that would provide more disclosures on firms that borrow from the Fed's discount window and on its open market operations.

I do believe it's important that there be a time lag before information is released about who bought what, and who went where, so that you -- this does not become information on which people act in the market, Frank said.

I would say, however, that that's different from saying that after a suitable time period, so that there won't be this market effect, you don't have a right to go to a federal agency, borrow money and keep it secret forever, added Frank, a Massachusetts Democrat.

Frank said he wanted to incorporate elements of the Fed audit bill, proposed by Texas Republican and frequent Fed critic Rep. Ron Paul, into broader financial regulatory reform legislation under consideration in Congress this fall.

Under the broader legislation, the Fed would get new powers to regulate systemic risk in the financial system and would cede its consumer protection functions to a new agency that would consolidate consumer financial protection.

On disclosing names of borrowers after a suitable time lag, Frank told Alvarez that he wanted the Fed to to help us enact that, to -- to put that concept into statute.

Later in the hearing, however, Alvarez said he had concerns that institutions would use Fed lending facilities less if their identities were disclosed. There was a danger that some healthy banks borrowing from the Fed could be stigmatized, he said.

The concern is that borrowers in those facilities, if their names were disclosed, would be viewed by the public incorrectly as institutions that are troubled, because we have also lent in other ways to troubled institutions, such as Bear Stearns and American International Group, he said.

And so because we do help troubled institutions and those that are not troubled, the concern of those that are not troubled is they'll be lumped in with the troubled ones..

(Reporting by David Lawder, editing by Will Dunham)