Boston Fed Mismanaged Check Program, Report SaysBoston Fed Mismanaged Check Program, Report Says
Congressional investigators say they have found mismanagement in a check-clearing program run by the Federal Reserve Bank of Boston, which may have overcharged taxpayers while undercutting private companies in the same business.
The Boston Fed program "Often operates with no-bid, no-lose contracts, poor cost controls and very likely routinely violates laws designed to make private competition possible," said Rep. Henry B. Gonzalez of Texas, the ranking Democrat on the committee on Banking and Financial Services.
Gonzalez, whose staff conducted the investigation, described the problems as serious and has asked the banking committee and Attorney General Janet Reno to investigate.
The alleged mismanagement is of a system that moves $10 billion in canceled checks each night between Federal Reserve offices so they can be cleared by the federal and commercial banks.
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