"Well, Congressman, these specific allegations you've made I think are absolutely bizarre, and I have absolutely no knowledge of anything remotely like what you just described." That dismissive and ridiculing testimony by Federal Reserve Chairman Ben Bernanke responding to Congressman Ron Paul's questions occurred two years ago. His questions were related to parts of my book, Deception and Abuse at the Fed about Congressional investigations of money found on the Watergate burglars and Fed audits related to the U.S. government's $5.5 billion "agricultural" loan sent to Saddam Hussein. After Bernanke's testimony Congressmen Barney Frank and Ron Paul wrote to Bernanke seeking information.

Two years later, the Federal Reserve Inspector General Mark Bialek posted a 31-page reply on the Federal Reserve website, "Inquiry into Allegations of Undue Political Interference with Federal Reserve Officials Related to the 1972 Watergate Burglary and Iraq Weapons Purchases during the 1980s" (emphasis added). Bialek claims there was no "Undue Political Interference."

The IG reports: "At the suggestion of Representative Paul's staff, we reviewed a discussion of these allegations in a book by a professor at the University of Texas at Austin and contacted the professor for any additional information regarding these allegations." My name is not mentioned. Here is an example made available to the IG of extreme "Undue Political Influence" missing from his report.

A massive U.S. government crisis began on June 22, 1972. A night watchman captured members of the Nixon Administration's White House Special Investigation Unit, known as the "plumbers," who had broken into their opposition's National Democratic Party Headquarters in the Watergate Office Complex in Washington, D.C. President Richard Nixon resigned and was later granted a presidential pardon by President Gerald Ford. More than fifty people received criminal convictions and there were guilty pleas from nineteen corporations.

I assisted House Banking Chairman Henry Reuss in 1976 in tracing the money found on the Watergate burglars. After six months of Reuss requesting and arguing with Chairman Arthur Burns for Fed records, minutes of the boards of directors' meetings from the 12 Fed district banks were delivered to the Congress. I informed Reuss of evidence from the minutes of a meeting of the Philadelphia Federal Reserve Bank board of directors held five days after the Watergate burglars were arrested:



Mr. [Fed official] reported that $6,300 in one hundred dollar bills had been found on the persons arrested for breaking into the Democratic National Committee headquarters in Washington. The FBI came to this Bank and said that ten new C-notes numbered in sequence were among those found. This bank informed the FBI that they were part of a shipment sent to Girard Bank April 3. Mr. [Fed official] also said that the Washington Post had called to verify a rumor that these bills were stolen from this bank. The Post was informed of the CV&D thefts but told they involved old bills that were ready for destruction.

"Mr. [Fed official] said that Chairman Burns doesn't want the System to get involved and issued a directive to all Reserve Banks on June 21, which said in effect that the System was co-operating with law enforcement agencies but should not disclose any information to others."

In the heat of the crisis the reporter was given false or misleading information about a previous robbery, "the CV&D thefts by Fed employees," because "Chairman Burns doesn't want the System to get involved". Bob Woodward told me he thought he was the Washington Post reporter who had made the phone inquiry.

Senator William Proxmire and House Banking Chairman Wright Patman were blocked by Fed Chairman Burns who steadfastly refused to supply information. Burns said he was blocking the information after the Fed "consulted with the U.S. Attorney" and Fed "Vice Chairman, [J.L.] Robertson, who is, as you know, a lawyer with considerable experience in law enforcement." Senator Proxmire refuted that excuse for stonewalling Congress:

"In fact, the situation is even worse than I thought. I now find that the U.S. Attorney did not ask in any formal way that you withhold the information from me and that in addition neither you nor he made any independent judgment that the information I sought could impair the investigation or harm the right of a defendant."

Chairman Burns' stonewalling to keep the Fed from being caught in the Watergate scandal was extreme undue political interference. Inspector General Mark Bialek's report bypasses this information that was made available to him. His report is a blatant cover-up of corrupt practices at the Federal Reserve that underlines the fact that the Fed IG's are not independent because they are appointed by the unelected Federal Reserve Board of Governors whom they investigate.