Critic Alleges Coverup at Federal Reserve

Article excerpt

Federal Reserve employees in Los Angeles, at one of the biggest currency-processing centers in the country, were ordered to falsify reports to cover up $178 million in discrepancies, a longtime congressional critic of the Fed alleged Monday.

Rep. Henry B. Gonzalez, the senior Democrat on the House Banking Committee, said that he had asked the General Accounting Office to conduct an investigation. His allegations are the latest in a string of reports about sloppy management at the Fed.

"We cannot allow the central bank of the United States, the main custodian of the nation's currency and coin, to commit continual and serious errors in reporting its currency and coin operations," Gonzalez, D-Texas, said in a letter to Federal Reserve Chairman Alan Greenspan.

Gonzalez said he had been informed by sources, whom he did not identify, that Fed personnel in Los Angeles had been instructed to eliminate discrepancies in currency flows at the Los Angeles vault that in the last three months of 1995 totaled $178 million.

These accounting gimmicks covered up shortages of $5.8 million in October and $111.1 million in December between two different reports.

In November, the report that was changed actually came in $61. …