Inconvenient Truth #17: The Federal Reserve Bank

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A lot of “conspiracy theories” revolve around the Federal Reserve Bank.  This inconvenient truth will reveal facts about the Fed, from their own publication, “Federal Reserve Purpose and Function”, of which I have attached a link to both the “live” and “archived” copies (I archived it in case the live copy disappears from the internet).

This document explains the history and function of the Fed.  A few points that should be noted here are:

a.  The Federal Reserve is NOT a “Federal” institution.  Proof of this is by it’s statment that it is “…considered to be an independent central bank because it’s decision do not have to be ratified by the President or anyone else in the executive branch of government…” [p 2].

b.  Though it is true that the Fed is subject to oversight by the U.S. Congress, “…the description of the system as ”independent within the government” is more accurate…”[p3]

c.  Though the Fed goes through a “quasi-audit” each year, note the following:

“…The Board is audited annually by a major public accounting firm…Monetary policy is exempt from audit by the GAO because it is monitored directly by Congress through written reports, including the semiannual Monetary Policy Report to the Congress, prepared by the Board of Governors…” [p6]

d.  As proof that the U.S. Treasury does not print currency without approval of the Fed, note:

“…A network of twelve Federal Reserve Banks and their Branches (twentyfive as of 2004) carries out a variety of System functions, including serving as banker for the U.S. Treasury…” [p6]

e.  Seeing thru the mumbo jumbo about it’s board of directors, we can find the following fact’s about each of the 12 regional Federal Reserve Banks (not a bank at all, but a “collection” of PRIVATE banks):[p 10]

– “…Each Reserve Bank has its own board of nine directors…”
– “…Three directors, designated Class A directors, represent commercial banks that are members of the Federal Reserve System…”
– “…Three Class B and three Class C directors represent the public…”
– “…The member commercial banks in each District elect the Class A and Class B directors…”
– “…The Board of Governors appoints the Class C directors to their posts…”
– “From the Class C directors,the Board of Governors selects one person as chairman and another as deputy chairman….”
– “…The directors in turn nominate a president and first vice president of the Reserve Bank, whose selection is subject to approval by the Board of Governors…”
– “Each Branch of a Reserve Bank has its own board of directors composed of at least three and no more than seven members. A majority of these directors are appointed by the Branch’s Reserve Bank; the others are appointed by the Board of Governors…”

From the above statements, we find that:

  1. There are 9 directors for each Federal Reserve Bank (12 banks in all)
    • Please remember that the 12 “banks” are not banks in the traditional sense, they are comprised of commercial banks.
  2. the class “A” Directors (3 ea),represent the commercial banks that make up the Federal Reserve “Bank”.  The Class “B” (3 ea) and class “C” (3 ea) directors represent “the public”.
    • These class “A” directors are chosen by…the commercial banks themselves!
    • Additionally, the class “B” directors, who supposedly represent the public, are chosen by…the commercial banks!
    • The class “C” directors, supposedly representing the public, are chosen by…The Board of Governors (heads of commercial banks)
    • The Board of Governors (heads of Commercial Banks) next choose the chair and vice-chair!
    • The “Directors” of each Federal Reserve Bank then “nominate” (not choose) a President and Vice-President, who are “approved” by…The Board of Governors! (heads of commercial banks)
  3. Each Branch of a Federal Reserve Bank (remember, each Federal Reserve Bank is just a container made up of commercial banks), get’s to select it’s own directors…and the Board of Governors selects the rest.
  4. Now, in all the above, did anyone in any position of control get selected from the public’s interest?  NO!  All positions of authority and decision making are from the commercial banks themselves.

Archived link:  The Federal Reserve

Official link (if available):  http://www.federalreserve.gov/pf/pf.htm

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About SleepNoMore

"Orthodoxy means not thinking-not needing to think. Orthodoxy is unconsciousness." -1984
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2 Responses to Inconvenient Truth #17: The Federal Reserve Bank

  1. Dan S. says:

    The class A and B directors are chosen by the private banks that own the Federal Reserve banks. The class C directors are chosen by the Board of Governors (of the Federal Reserve System), who are in fact government employees. So while it’s not QUITE as bad as you paint it, it’s plenty bad enough!

    • SleepNoMore says:

      Although technically (that term is dangerous!) you are correct, let us examine just a little further the full implications of your statement:

      a. The Board of Governors are NOMINATED by the President, and CONFIRMED by the Senate. Although paid by the Federal Government, I do not believe this means they are government employees. They are completely independent and their actions cannot be overturned.
      b. In Kennedy C. SCOTT, Appellant,v . FEDERAL RESERVE BANK OF KANSAS CITY, et al., Appellee., we find the following facts:
      1. “…The Bank (FRB of Kansas) argues that it is not a federal agency for purposes of Rule 4 because Federal Reserve Banks are distinct from the Board of Governors, owned by commercial banks, and directly supervised in their daily operations by separate boards of directors—not the federal government. Further, the Bank states that Federal Reserve Bank employees are not considered federal employees, officials, or representatives for purposes of 12 U.S.C. § 341. The Bank also contends, inter alia, that the plain language of 28 U.S.C. § 451 and relevant case law state that Federal Reserve Banks are not federal agencies.…”
      2. “…The Bank is a private, independent entity independently run by its own board of directors. It is not run by the Federal Reserve Board of Governors or any other part of the executive branch…”
      3. “…The Bank is considered a separate corporation owned solely by commercial banks within its district, distinct from the Board of Governors.…”
      4. “…Each Federal Reserve Bank is run by a nine-member board of directors which oversees each Bank’s day to day operations. 12 U.S.C. §§ 301-304, and 341. The Board of Governors only provides broad, general policy supervision. See, e.g., 12 U.S.C. § 521 (stating that the Board may order the opening or closing of a branch). The employees of the Bank are not government employees. They are at-will employees who are not entitled to participate in the Civil Service Retirement System. Lewis, 680 F.2d at 1241. The Bank’s employees “are covered by worker’s compensation insurance, purchased by the Bank,… [not by] the Federal Employees Compensation Act.” Id. The Bank can, as in this case, sue and be sued in its individual capacity without being represented by the government. 12 U.S.C. § 341. Accordingly, although the Bank may play a role in the implementation of federal fiscal policy, it does so independently of any substantial government involvement….”
      5. “…no statute designates Federal Reserve Banks as federal agencies. Federal Reserve Banks are authorized to be government fiscal agents and the Federal Reserve Banks and the Treasury refer to the Federal Reserve Banks as fiscal agents of the United States. 12 U.S.C. § 391 (stating that the Federal Reserve Banks are fiscal agents of the government); see, e.g., 31 C.F.R. § 210.7 (referring to the Federal Reserve Banks as fiscal agents of the government). However, at least one circuit, the Second Circuit, has held that acting as an agent for the government does not make that entity a federal agency. Cohen v. Empire Blue Cross and Blue Shield, 176 F.3d 35, 42 (2d Cir.1999)….”

      So, in summary, we find that, although the Board of Governors MAY be considered under some sort of scenario government employees (however, see my argument above why they are not), they exercise no real authority over the Federal Reserve Banks, who are completely owned and run by the private banks. So, what is the REAL relevance here, that the Federal Reserve Board of Governors may be some quasi-federal employee’s, or that the whole system is completely separate from the government? Note: Look in the short future for the absolutely criminal act by the Fed in putting our futures at risk by making short-term loans (in the order of tens of trillions) to EUROPEAN BANKS…

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