Big Bad Bills: Fed Stuck With Bad $100s

Dec. 7, 2010 &#151 -- About 1.1 billion new $100 bills that were set to be released next year have been quarantined in Bureau of Engraving and Printing vaults across the country because of a creasing problem.

The new bills -- with advanced anti-counterfeiting features -- cost about 12 cents each to produce. That makes the new $100 bills the most costly U.S. paper currency ever made. If the Federal Reserve had to pay for them, it would have cost about $120 million to produce bills it can't use.

In October, the Federal Reserve identified a problem with printing the new bills, but the magnitude of the problem was unclear.

"The Bureau of Engraving and Printing manufactures Federal Reserve notes and has identified a problem with sporadic creasing of the paper during printing of the new $100 note, which was not apparent during extensive pre-production testing," said the statement at the time, which went mostly unnoticed.

Sources tell ABC News that an initial quality check on a small sample of the new bills by the Bureau of Engraving and Printing determined that "more than half" the new bills were fine and could be distributed. But you don't have to be a Fed economist to realize what that means -- up to 49.9 percent of the bills could be defective.