Not that this will settle any arguments, but it is “interesting” to see who the Federal Reserve Bank thinks of Who owns the Federal Reserve?
The Federal Reserve System fulfills its public mission as an independent entity within government. It is not “owned” by anyone and is not a private, profit-making institution.
As the nation’s central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.
However, the Federal Reserve is subject to oversight by the Congress, which often reviews the Federal Reserve’s activities and can alter its responsibilities by statute. Therefore, the Federal Reserve can be more accurately described as “independent within the government” rather than “independent of government.”
I wonder if Rand and Ron Paul know of this? If they do know, do they care? Even if they know and care, they will still argue about what this means. I only use the Pauls as representative of the people who argue this.
Someone is bound to say that the private member banks own shares of the Federal Reserve Bank, and thus they own it. So here is the last paragraph from the Federal Reserve’s document.
The 12 regional Federal Reserve Banks, which were established by the Congress as the operating arms of the nation’s central banking system, are organized similarly to 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, 6 percent per year.
I can imagine all the “Yes, but …”s gurgling through the readers’ minds. My take on the meaning of this second excerpt is that the “shares of stock” are more like tickets the banks have to buy if they want entry into the system. It gives the banks who buy them certain privileges and benefits, but it doesn’t give them ownership. When you buy tickets to Ringling Brothers’ Circus, do you think you own the circus?
There are other links in the document, but the above two excerpts are all the explanatory text in it at the time of writing this post.
February 11, 2019
See my subsequent post Bernanke: “The Fed will do whatever Congress tells us to do.”