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WHO
OWNS THE FEDERAL RESERVE? In my last essay entitled ‘T’ Minus Ten hyperlinked here, I had a list of what I was led to believe were the stockholders in the Federal Reserve. Here is the list that was in this essay...
I considered my source on this to be impeccable, and I had seen this list several times on the Internet over the last few years, and had a copy of it on my hard drive for the last six months as well. Plus, if you do a Google search, the first three or four items on this subject will show this set of names. However, a kind reader suggested that this list was far from being correct. After numerous e-mail exchanges, and some incredible research work on his part, a different set of names has emerged. The source of these names is directly from the Federal Reserve Bank of New York itself…so it’s a little hard to dispute them. I’m indebted to Peter Rhalter who did all the heavy lifting and spadework in what follows next…. In an e-mail to Mr. Rhalter from Agata Zhang…a “Business Support Analyst” at the Federal Reserve…Zhang had this to say: “The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation's central banking system, are organized much like private corporations - possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. 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. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, six percent per year. Again, the holding of stock in a Federal Reserve Bank does not carry with it the control and financial interest conveyed to holders of common stock in for-profit organizations.” “Below is the most current list of all member banks in the 2nd district (both national and state).”
Referring back to the e-mail to Peter Rhalter from Agata Zhang at the Federal Reserve Bank, I would like to paraphrase his reply a bit… “However, owning Reserve Bank stock is quite different from owning stock in a private company…holding of stock in a Federal Reserve Bank does not carry with it the control and financial interest conveyed to holders of common stock in for-profit organizations.” Zhang certainly has the gift of understatement when he/she inserted these comments in his/her e-mail. But to give credit where credit is due, Zhang at least mentioned that the Federal Reserve’s stock was not anywhere close to being what it’s function would be in a private company. By saying that, Zhang unknowingly spilled the beans on what the Federal Reserve really is. It’s a banking cartel. There is no better expert on this ‘banking cartel’ than G. Edward Griffin, the author of “The Creature From Jekyll Island: A Second Look at the Federal Reserve”. Congressman Ron Paul from the great state of Texas, and a member of the House Banking Committee, had this to say about Griffin’s book… "A superb analysis deserving serious attention by all Americans. Be prepared for one heck of a journey through time and mind." In the appendix of this book (now in its 16th printing) Griffin had this to say, and he doesn’t pull his punches: (A.) Structure and Function of the Federal Reserve System The three main components of the Fed are: (1) the national Board of Governors, (2) the regional Reserve Banks, and (3) the Federal Open Market Committee. Lesser components include: (4) the commercial banks, which hold the stock, and (5) the advisory councils. The function of the national Board of Governors is to determine the system’s monetary policy. The Board consists of seven members who are appointed by the President and confirmed by the Senate. Their terms of office are fourteen years and are staggered so that they do not coincide with the presidential term of office. The purpose of this is to insure that no single President can dominate Fed policy by stacking the Board with his appointments. One Board member is appointed as the Chairman for four years and another as Vice Chairman for four years. The Chairman controls the staff and is the single most powerful influence within the system. Control is exercised by the Board and a handful of top staff employees. The Federal Reserve Act mandated that the President, when selecting Governors “shall have due regard to a fair representation of the financial, agricultural, industrial and commercial interest, and geographical divisions of the country.” This mandate is now almost completely ignored, and the men come primarily from the fields of banking and finance. The function of the regional Reserve Banks is to hold cash reserves of the system, supply currency to member banks, clear checks, and act as fiscal agent for the government. The twelve regional Reserve Banks are located in Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, New York, Philadelphia, Richmond, San Francisco, and St. Louis. They are corporations with stock held by the commercial banks, which are members of the system. Member banks elect the directors of the regional Reserve Banks of which they are a part. The larger banks hold more shares but only one vote in the selection of the Directors. Within each regional-bank system there are nine Directors. The member banks elect three Class-A directors who represent the banking industry and three Class-B directors who represent the general public. The remaining three Class-C directors are appointed by the national Board. The Chairman and Vice Chairman of each regional Reserve Bank must be Class-C directors. The selection of President and other officers is subject to veto by the national Board of Governors. In this way, the national Board is able to exercise control over the regional branches of the system. The function of the Federal Open Market Committee is to implement the monetary policy set by (the) National Board, although it exercises considerable autonomy in setting its own policy. It manipulates the money supply and interest rates primarily by purchasing or selling government securities---although it also accomplishes that through the purchase or sale of foreign currencies and securities of other governments as well. Money is created and interest rates go down when it purchase. Money is extinguished and interest rates go up when it sells. Policy is formulated on a daily basis. In fact, it is monitored by the minute and the Committee often intervenes in the market to affect immediate changes. The Open Market Committee is composed of the national Board of Governors plus five of the twelve regional Presidents who serve on a rotating basis. The exception to this is the President of the New York regional Bank who is always on the Committee. Thus, once again, the System is firmly in control of the national Board with the President of the New York regional Bank being more powerful than the others. Twenty-four bond dealers handle all sales of government securities. Government agencies cannot exchange with each other without going through dealers who earn commissions on each transaction. Decisions are made at secret meetings. A brief report is release to the public six weeks later, but transcripts of the deliberations are destroyed. That policy was begun in 1970 when the Freedom-of-Information Act was passed. Not even the CIA enjoys such secrecy. The function of the member banks is to conduct the nation’s banking business and to implement the System’s monetary policy in terms of putting money into (or drawing it out of) the system at the point of contact with individual or corporate borrowers. This leads to the troublesome question of ownership. The federal government does not own any stock in the System. In that sense, the Fed is privately owned. That, however, is misleading in that it implies a typical private-ownership relationship in which the stockholders own and control. Nothing could be further from the truth. In this case, the stock carries no proprietary interest, cannot be sold or pledged as collateral, and does not carry ordinary voting rights. Each bank is entitled to but one vote regardless of the amount of stock it holds. In reality, the stock is not evidence of “ownership” but simply certificates showing how much operating capital each bank has put into the System. It is not a government agency and it is not a private corporation in the normal sense of the word. It is subject to political control yet, because of its tremendous power over politicians and the elective process; it has managed to remain independent of political oversight. Simply stated, it is a cartel, and its organization structure is uniquely structured to serve that end.
So…between Peter Rhalter, The Fed spokesman Agata Zhang, and G. Edward Griffin’s fine work…I think that we can give the first list of Federal Reserve shareholders the decent burial it deserves. Peter calls this list an “urban legend.” But to be truthful about it…it’s patently false, as most of the financial institutions named on this list don’t even exist…as both Peter and I discovered. But in the end, it’s the Federal Open Market Committee (FOMC) and the current Chairman…Sir Alan…that are running the show from behind the curtain on a daily and hourly basis. And nowhere in Ed Griffin’s comments does he mention that Alan has to listen to what the regional Reserve Banks are saying…and he probably doesn’t a lot of the time. I would bet there are a lot of voices in England, Germany, China and Japan…just to name a few countries…that would have a much higher priority. The Federal Reserve System is not a democratic organization…it’s a dictatorship…a political destiny that they (and others) have in mind for all of America. That’s why The Federal Reserve System was created in the first place, and that’s something that Ed Griffin explains in minute detail in his book. Read it!
Ed
Steer, Director The opinions of FSU contributors do not necessarily reflect those of Financial Sense. |
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