The New York Federal Reserve bank official in charge of the department that reported a multibillion-dollar error in the money supply six weeks ago has resigned.
A Federal Reserve bank spokesman confirmed that Rudolf Thunberg resigned Wednesday as vice president and associate director of research at the New York Fed.
Federal Reserve officials were sensitive when questioned about the reasons for Thunberg's resignation, but said that it had nothing to do with the events leading up to the reporting of the error.
Manufacturers Hanover Trust has admitted that it was responsible for the error in the report it makes weekly to the Federal Reserve because of an error in its computer program.
Knowledgeable sources said that Thunberg and other bank officials had differences of opinion on several matters after the Fed's report of the error, but would not be specific as to what problems existed.
Several weeks after the Federal Reserve Board announced a stringent new money growth in early October, the New York bank (which collects money supply data) announced a massive increase in money growth. The Fed's figures were distorted by the error in reporting by Manufacturers Hanover.
The already panicky market reacted swiftly to the announcement and bond and stock prices fell sharply in anticipation of further central bank moves to restrain money growth. All told, securities prices declined as much as $100 billion during October -- although they have recovered some of that since then.
The Fed has hired the law firm of Fulbright & Jaworski to investigate the errors and to see if there was any wrongdoing involved in the misreporting. t