The Federal Reserve is an agency of U.S. Government created by Congress in 1913. Accordingly, the Fed has turned monetary policy (since the days of Alan Greenspan) into an instrument of further enriching the rich by creating and safeguarding asset-price bubbles. A number of critics have argued that, using its proxies at the heads of the Fed and the Treasury, the financial oligarchy used the financial crisis of 2008 as a shock therapy to transfer trillions of taxpayer dollars to its deep pockets, thereby further aggravating the already lopsided distribution of resources. While many independent thinkers and policy makers of times past thus viewed the unchecked power of private central banks as a vice not to be permitted to interfere with a nation’s monetary/economic policies, most economists and policy makers of today view the independence of central banks from the people and the elected bodies of government as a virtue! Who Owns the Federal Reserve? He is the author of Beyond Mainstream Explanations of the Financial Crisis (Routledge 2014), The Political Economy of U.S. Militarism (Palgrave–Macmillan 2007), and the Soviet Non-capitalist Development: The Case of Nasser’s Egypt (Praeger Publishers 1989). In the same manner that many infrastructural facilities such as public roads, school systems and health facilities are provided and operated as essential public services, so can the supply of credit and financial services be provided on a basic public utility model for both day-to-day business transactions and long-term industrial projects. Notre site en Français: mondialisation.ca, This article was first published by Global Research in October 2008, “Some people think that the Federal Reserve Banks are United States Government institutions. . Provision of financial services and/or credit facilities after the model of public utilities would allow for lower financial costs to both producers and consumers. The ownership of the 12 Central banks, a very well kept secret, has been revealed: Rothschild Bank of London Warburg Bank of Hamburg Rothschild Bank of Berlin Lehman Brothers of New York Lazard Brothers of Paris Kuhn Loeb Bank of New York Israel Moses Seif Banks of Italy Owning half of the largest economy’s debt may force the Federal Reserve to either declare bankruptcy or ask to be bought out. . They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.” – The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s. But is that true? The Federal Reserve was … What does the Federal Reserve do to promote the safety and soundness of the banking system? For just over a century, The Fed has overseen the financial system of the US, but its track record has been far from perfect. A number of commentators have argued that some of the damning words used in this much-quoted statement are either not Wilson’s own, or taken out of context. Federal Reserve Statistical Release H.8 puts the total “loans and leases in bank credit” as of September 24, 2008 at $7,049 billion. Two of the current governors were put into their position by President Trump. She is the only Ph.D. economist on the board. Nobody denies, however, that regardless of the exact words used, he had serious reservations about the formation of the Federal Reserve Bank, and the misguided policy of delegating the nation’s money supply and/or monetary policy to a cabal of private bankers. “Independence has really come to mean a central bank that has been captured by Wall Street interests, very large banking interests. This is extraordinary. It has its source in socialism, but has been adapted to capitalist society; it is a fraudulent kind of socialism, modified to suit the needs of capitalism. That means we the taxpayers will be paying interest to the banks on at least $700 billion annually – this so that the banks can retain the reserves to accumulate interest on ten times that sum in loans. If the Fed’s money comes ultimately from the taxpayers, that means we the taxpayers are paying interest to the banks on the banks’ own reserves – reserves maintained for their own private profit. The banks earn these returns from the taxpayers for the privilege of having the banks’ interests protected by an all-powerful independent private central bank, even when those interests may be opposed to the taxpayers’ — for example, when the banks use their special status as private money creators to fund speculative derivative schemes that threaten to collapse the U.S. economy. It is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally. 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Global Research Ellen Brown, “How the Fed Could Fix the Economy—and Why It Hasn’t”,  Hilferding’s book, Finance Capital: A Study of the Latest Phase of Capitalist Development, has gone through a number of prints/reprints. This is an extremely ominous trend because, aside from issues of social justice and economic insecurity for the masses of the people, the policy of creating and protecting asset bubbles on a regular basis is also unsustainable in the long run. She was a senior Treasury official from 2010 to 2013, a senior member of the Brookings Institution from 2001 to 2008, and Deputy National Economic Advisor to President Clinton.She was a professor of economics at the MIT Sloan School of Management from … “Live Without Dead Time:” Guy Debord’s Last Shot, The Center Cannot Hold: Biden and the Challenge for Progressives, The Rich are Cheering Wall Street’s Latest Records. LinkedIn with Background . None of its stock is owned by the government. Each Reserve Bank has its own board of directors, which oversees the Bank's activities. In another bit of sleight of hand known as “fractional reserve” lending, the same reserves are lent many times over, further expanding the money supply, generating interest for the banks with each loan. We are making such material available to our readers under the provisions of "fair use" in an effort to advance a better understanding of political, economic and social issues. This quotation is from Chapter 10 of an online version of the book, which is available at: http://www.marxists.org/archive/hilferding/1910/finkap/ch10.htm. The Centre of Research on Globalization grants permission to cross-post Global Research articles on community internet sites as long the source and copyright are acknowledged together with a hyperlink to the original Global Research article. I have included a full list from May 27, 1914, which would be the initial member’s composition when the Federal Reserve Act was passed on Christmas Eve 1913. Fact number one: the Federal Reserve System (hereinafter the Fed), although created by Congress, is answerable not to the public but to itself. By freeing consumers and producers from what can properly be called the financial overhead, or rent, similar to land rent under feudalism, the public option credit and/or banking system can revive many stagnant economies that are depressed under the crushing burden of never-ending debt-servicing obligations. As the late German Economist Rudolf Hilferding argued long time ago, the system of centralizing people’s savings and placing them at the disposal of profit-driven private banks is a perverse kind of socialism, that is, socialism in favor of the few: “In this sense a fully developed credit system is the antithesis of capitalism, and represents organization and control as opposed to anarchy. After paying its expenses, the Federal Reserve turns the rest of its earnings over to the U.S. Treasury.”5. Its structure as “independent within government” makes it hard to decipher precisely who owns it. Unlike the risky derivative debt, federal securities are considered “risk-free” for purposes of determining capital requirements, allowing the banks to improve their capital position so they can make new loans. The Fed balance sheet is a financial statement published once a week that shows what the Federal Reserve (Fed) owns … A: There are actually 12 different Federal Reserve Banks around the country, and they are owned by big private banks. J. W. McCallister, an oil industry insider with House of Saud connections, wrote in The Grim Reaper that information he acquired from Saudi bankers cited 80% ownership of the New York Federal Reserve Bank- by far the most powerful Fed branch- by just eight families, four of … Is there a solution to the ravages wrought to the economies/societies of the core capitalist countries by the accumulation needs of parasitic finance capital—largely fostered or facilitated by the privately-owned central banks of these countries? GlobalResearch Center for Research on Globalization. Also unprecedented was the way the deal was funded. Bonus Presentation here: http://www.hiddensecretsofmoney.com Who owns the Federal Reserve? A Federal Reserve Bank is a regional bank of the Federal Reserve System, the central banking system of the United States. There is nothing “federal” about this “system”. Margrit Kennedy, Occupy Money: Creating an Economy Where Everybody Wins, Gabriola Island, BC (Canada): New Society Publishers, 2012. Free Books! Nineteenth century neighborhood savings banks, Credit Unions, and Savings and Loan associations in the United States, Jusen companies in Japan, Trustee Savings banks in the UK, and the Commonwealth Bank of Australia all served the housing and other credit needs of their communities well. Among other benefits to the taxpayers. Such was indeed the case in the immediate aftermath of the Great Depression and WW II when the Fed had to follow the guidelines of the Congress, the White House and the Treasury Department. It might be independent of the politicians, but it doesn’t mean it is a neutral arbiter. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. As we know from watching the business news, “oversight” basically means that Congress gets to see the results when it’s over. By contrast, public-sector banks can better reassure depositors of the security of their savings, as well as help direct those savings toward socially-beneficial credit allocation and productive investment. But the banks don’t necessarily run the … However, owning Reserve Bank stock is quite different from owning stock in a private company. 2. Freed from the regulatory constraints of the immediate post-WW II period (which determined the types, quantities and spheres of its investments), the financial sector has effectively turned into a giant casino. supervise and regulate banks. Another MAJOR MYTH associated with the Fed is its purported commitment to national and/or public interest. As the regulatory framework of the New Deal economic policies restricted the role of commercial banks to financial intermediation between savers and investors, finance capital moved in tandem with industrial capital, as it essentially greased the wheels of industry, or production. Her websites are www.webofdebt.com and www.ellenbrown.com . . The answer is both. These include its name, its ownership, its purported independence form external influences, and its presumed commitment to market stability, economic growth and public interest. They seem to believe (or hope) that the likely disturbances from the bursting of one bubble could be offset by creating another bubble! Not long before the establishment of the Federal Reserve Bank in 1913, President William Taft (1909-1913) pledged to veto any legislation that included the formation of a private central bank. These directors contribute local business experience, community involvement, and leadership and reflect the diverse interests of each District. They can then turn around and put this money into 30-year Treasury bonds at 4.5%, earning an immediate 2.5% from the taxpayers, just by virtue of their position as favored banks. The program will auction Treasury bills to raise cash for the Fed’s use. . If the Federal Reserve owns more than 15% of America’s debt, it can play it safe and exit at any time, but if they owned, let’s say 50%, their decision to keep this bad investment comes into play. During that period of nearly three quarters of a century, monetary policies were carried out, more or less, according to the U.S. Constitution: Only the “Congress shall have power . Comment on Global Research Articles on our Facebook page, Disclaimer: The contents of this article are of sole responsibility of the author(s). Among other special benefits, banks and other financial institutions (but not other corporations) can borrow at the low Fed funds rate of about 2%. Nobody actually owns the Federal Reserve, just as nobody actually owns the U.S. Congress or the U.S. Department of Justice. An updated members list is also included from the year 2015. The deal was particularly controversial because Jamie Dimon, CEO of JPMorgan, sits on the board of the New York Fed and participated in the secret weekend negotiations.1 In September 2008, the Federal Reserve did something even more unprecedented, when it bought the world’s largest insurance company. . He is also a contributor to Hopeless: Barack Obama and the Politics of Illusion. The third board member is Lael Brainard. The Federal Reserve is the cornerstone of the American economy. Minutes of the Federal Open Market Committee, November 4-5, 2020 Press Release - 11/25/2020 . Yahoo Finance reported on September 17: “The Treasury is setting up a temporary financing program at the Fed’s request. Part I. by Dean Henderson (Part one of a four-part series) The Four Horsemen of Banking (Bank of America, JP Morgan Chase, Citigroup and Wells Fargo) own the Four Horsemen of Oil (Exxon Mobil, Royal Dutch/Shell, BP and Chevron Texaco); in tandem with Deutsche Bank, BNP, Barclays and other European old money behemoths. Perhaps a most interesting and instructive example is the case of the Bank of North Dakota, which continues to be owned by the state for nearly a century—widely credited for the state’s budget surplus and its robust economy in the midst of the harrowing economic woes in many other states. This ushered in the beginning of the gradual rise of national debt, as the government henceforth relied more on borrowing from banks than self-financing, as it had done prior to granting the power of money-creation to the private banking system. The only real leverage Congress has over the Fed is that it “can alter its responsibilities by statute.” It is time for Congress to exercise that leverage and make the Federal Reserve a truly federal agency, acting by and for the people through their elected representatives. Letter from Chair Powell to Secretary Mnuchin regarding emergency lending facilities Recent Posting - 11/20/2020 . Her term is June 16, 2014 to January 31, 2026. Over the same period of time, the share of income going to upper-income households rose from 29 percent to 49 percent. Who Owns The World’s Central Banks from ZeroHedge Support The Daily Coin $ Donation Amount: $10.00$25.00$50.00$100.00$250.00Custom AmountDonate Now Select Payment Method PayPal Personal Info First Name * Last Name Email Address * Make this an anonymous donation. a truly “federal” Federal Reserve could lend the full faith and credit of the United States to state and local governments interest-free, cutting the cost of infrastructure in half, restoring the thriving local economies of earlier decades. According to the Fed’s website, the control Congress has over the Federal Reserve is limited to this: “[T]he Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute.”. The banks are jointly responsible for implementing the monetary policy set forth by the Federal Open Market Committee, and are divided as follows: Federal … . The first MAJOR MYTH, accepted by most people in and outside of the United States, is that the Fed is owned by the Federal government, as implied by its name: the Federal Reserve Bank. The Associated Press called it a “government takeover,” but this was no ordinary nationalization. The initiative aims to help the Fed manage its balance sheet following its efforts to enhance its liquidity facilities over the previous few quarters.”. Extensive deregulations that led to the 2008 financial crisis, the scandalous bank bailouts in response to the crisis, the continued showering of the “too-big-to-fail” financial institutions with interest-free money, the failure to impose effective restraints on these institutions after the crisis, the brutal neoliberal cuts in social safety net programs in order to pay for the gambling losses of high finance, and other similarly cruel austerity policies—can all be traced to the political and economic power of the financial oligarchy, exerted largely through monetary policies of the Fed. The Fed’s website insists that it is not a private corporation, is not operated for profit, and is not funded by Congress. Unlike the U.S. Treasury, which took over Fannie Mae and Freddie Mac the week before, the Fed is not a government-owned agency. In other words, the Fed’s monetary policy has effectively turned into a means of redistribution from the bottom up. The website of the Federal Reserve Bank of New York explains that as money is redeposited and relent throughout the banking system, this 10% held in “reserve” can be fanned into ten times that sum in loans; that is, $10,000 in reserves becomes $100,000 in loans. In reality, however, central bank independence means independence from the people and the elected bodies of government—not from the powerful financial interests. Except for coins, every dollar in circulation is now created privately as a debt to the Federal Reserve or the banking system it heads.4 The Fed’s website attempts to gloss over its role as chief defender and protector of this private banking club, but let’s take a closer look. . It took its marching orders from the White House and the Treasury—and it was the most successful decade in American economic history” . Its shareholders are private banks (See E. Brown, “Bailout Bedlam,” webofdebt.com/articles, October 2, 2008.). These increasingly controversial encroachments on the public purse warrant a closer look at the central banking scheme itself. The Federal Reserve system is an imperfect, but rather innovative clearinghouse. The Associated Press reported: “The Treasury Department, for the first time in its history, said it would begin selling bonds for the Federal Reserve in an effort to help the central bank deal with its unprecedented borrowing needs.”2. copyright owner. It socializes other people’s money for use by the few” . The Fed’s mandate was then and continues to be to keep the private banking system intact; and that means keeping intact the system’s most valuable asset, a monopoly on creating the national money supply. Her eleven books include the bestselling Nature’s Pharmacy, co-authored with Dr. Lynne Walker, and Forbidden Medicine. In an unprecedented move in March 2008, the New York Fed advanced the funds for JPMorgan Chase Bank to buy investment bank Bear Stearns for pennies on the dollar. The Federal Reserve Banks are not a part of the federal government, but they exist because of an act of Congress. Trump says the Federal Reserve has been allowed to cause interest rates to soar, create huge dept, and slow the growth of the economy for far too long. Cnbc.com reports: The Board of Governors of the Federal Reserve is required to have seven members. The choice of the word “Federal” in the name of the bank thus seems to be a deliberate misnomer—designed to create the impression that it is a public entity. Today, between 35 percent and 40 percent of all consumer spending is appropriated by the financial sector: bankers, insurance companies, non-bank lenders/financiers, bondholders, and the like . In reality, however, it is a private institution whose shareholders are commercial banks; it is the “bankers’ bank.” Like other corporations, it is guided by and committed to the interests of its shareholders—pro forma supervision of the Congress notwithstanding. The material on this site is distributed without profit to those who have expressed a prior interest in receiving it for research and educational purposes. The Federal Reserve was set up in 1913 as a “lender of last resort” to backstop bank runs, following a particularly bad bank panic in 1907. If the Fed can demand AIG’s stock in return for an $85 billion loan to the mega-insurer, we can demand the Fed’s stock in return for the trillion-or-so dollars we’ll be advancing to bail out the private banking system from its follies. Will the World Community Condemn the Murder of Iran’s Nuclear Scientist? Normally, the Fed swaps green pieces of paper called Federal Reserve Notes for pink pieces of paper called U.S. bonds (the federal government’s I.O.U.s), in order to provide Congress with the dollars it cannot raise through taxes. There are compelling reasons not only for higher degrees of reliability but also higher levels of efficacy of public-sector banking and credit system when compared with private banking—both on conceptual and empirical grounds. To unmask this blatant misrepresentation, the late Congressman Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s, described the Fed in the following words: “Some people think that the Federal Reserve Banks are United States Government institutions. The Federal Reserve derives its authority from the Congress, which created the System in … According to Wikipedia (which translates Fedspeak into somewhat clearer terms than the Fed’s own website): “The Term Securities Lending Facility is a 28-day facility that will offer Treasury general collateral to the Federal Reserve Bank of New York’s primary dealers in exchange for other program-eligible collateral. No matter how long or how much they may expand financial bubbles—like taxes and rents under feudalism—are ultimately limited by the amount of real values produced in an economy. Web of Debt and Global Research 8 October 2008, The original source of this article is Web of Debt and Global Research. How does the Federal Reserve work? . Who Needs Zombies When We Have Republicans? The Federal Reserve Cartel: Who owns the Federal Reserve? Now, it seems, the government is issuing bonds, not for its own use, but for the use of the Fed! Here is how it works: When the government is short of funds, the Treasury issues bonds and delivers them to bond dealers, which auction them off. to coin money, regulate the value thereof” (Article 1, Section 8, U.S. Constitution). www.globalresearch.ca contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. What Are We Gonna Do Now to Save Our Democracy? Become Member of The twelve banks of the Federal Reserve system have certain features of private corporations, and certain features of governmental institutions. Ellen Brown, J.D., developed her research skills as an attorney practicing civil litigation in Los Angeles. It requires different politics and/or policies: politics of serving the interests of the overwhelming majority of the people, instead of a cabal of financial oligarchs. The idea of bringing the banking industry, national savings and credit allocation under public control or supervision is not necessarily socialistic or ideological.