Can you say "Cover up"?

When I first saw this email, I didn't think much of it. Then it hit me like a ton of bricks. How could this man say this, if it wasn't true? After all, he is counsel for the NY Federal Reserve Board. Now, I ask myself the question; "What do the investors, have to say"? I mean, if E-notes are worthless, the investors have invested in worthless "notes". Wow! How much money are we talking about here? Billions?

Federal Reserve Bank
New York
“From: ucclaw-l-bounces@lists.washlaw.edu
On Behalf Of Joseph.Sommer@ny.frb.org
Sent: Friday, March 26, 2010 11:15 AM
To:xxx-xxx-xxx
Subject: Re: [Ucclaw-l] Electronic Promissory Notes

If I were confronted with an "electronic promissory note", I would walk very slowly away and break into a run as soon as I can.

They are a logical impossibility, along with electronic chattel paper and UCC 7 electronic
warehouse receipts.

The word "electronic" is miserably defined in all the statutes. But we all kinda sorta know
what it means: something in a computer, rather than in some more fixed medium. Of course, a
computer is made of matter and energy, just like a slip of paper or the side of a cow. So it
must mean something special to be "in a computer."

And it does! Most records are stably associated with a particular agglomeration of
matter which--if it is not realty--can be physically transferred from one person to
another. This includes paper, cows, and DVDs. If the piece of paper or Old Bossy or
the DVD is uniquely distinguishable from any other piece of paper or cow or DVD that bears
the same data structure, we have the basis for a system of negotiability.

However, computer records are not stably associated with any particular piece of matter.
Instead, they are stably associated with a system, which contains many pieces of matter
amongst which the record may be sitting, at any given moment. Or the record could be sitting
in 12 places in the system; it makes no difference. You don't need a unique piece of
matter to uniquely identify an obligation--there is no unique matter (or energy) associated with
the record. You just need an authoritative registry.

Hence the logical impossibility of an electronic promissory note. "Promissory note" means
unique piece of matter. "Electronic" means that there is no unique piece of matter, and
we're dealing with authoritative registries.

UCC 8 gets this right. It has two property systems that rely on unique pieces of matter
(registered and unregistered certificates), and two systems that rely on authoritative registries
(transfer agents and securities intermediaries.)

The cotton warehouse system gets this right, and talks in great detail about authoritative
registries. UCC 7, 9 and UETA screwed up.

They are bad law—literally incomprehensibly bad law.

The courts will probably eventually define 7, 9, and UETA into registry systems of some kind.
But until then, I would treat electronic negotiability systems as if they were rabid
cows.”

So, does this mean the Federal Reserve knows that worthless E-notes are being sold and they don't care? Or are they covering it up?