Is it true that Federal Reserve is a privately owned institution? ?

Question

I have heard that Federal Reserve is a privately owned institution. The people who own it are bankers. And the American Government has to borrow money from the Federal Reserve each year to release the annual budget.I also heard that Federal Resolve is also responsible for a lot of scams.

Is this all true?

Answer 1

Yes the term Federal leads people to believe that it is part of our government. That is why some of the conservative talk show people say that we should do away with it.  

Answer 2

There is a lot of misinformation about the Fed.

- Re: Is it a privately owned institution

No, the system itself is not privately owned. However the branches are considered member-owned corporations.

To review...

The Federal Reserve System is a congressionally-chartered agency like the USPS and NASA. It is organized with a 100% government agency at the top (the Board of Governors), branches beneath them that are organized like corporations with member banks as shareholders.(Ref: http://www.federalreserveeducation.org/f... , http://www.federalreserve.gov/generalinf... )

The Board of Governors are all appointed for 14-year terms by the president and confirmed by congress. It operates per it's charter and laws set by congress. it is overseen by congress. There is no structure or mechanism for private ownership at this level; it is a government agency. You can confirm this from a number of government sites that list it as a government agency (e.g. http://www.whitehouse.gov/government/ind... Board members are forbidden by law to have any economic interest in a private bank. (Ref: Title 12 chapter 3 of the U.S. Legal Code). The Board determines monetary policy and provides high level oversight of the branches.

The 12 branches can be considered highly regulated private corporations. Member banks are required to buy shares in their branch. Each bank has one vote.  They can vote for 6 of their 9 board members, the other 3 are appointed by the Board of Governors.  Though the branches are called non-profit, the member banks get a standard 6% dividend on their shares. The remaining 'profit' is turned over to the Treasury at the end of the year.

For confirmation on this, check out how Hoovers classifies them:

http://www.hoovers.com/free/search/simpl...

More reading:

http://www.geocities.com/CapitolHill/Emb...

http://www.publiceye.org/conspire/flaher...

http://famguardian.org/Subjects/MoneyBan...

http://webskeptic.wikidot.com/federal-re...

- Re: people who own it are bankers

No individual owns any shares in the Federal Reserve branches. All shares are owned by the member banks.

- Re: the American Government has to borrow money from the Federal Reserve each year to release the annual budget

No. The Federal Government never sells debt to the Federal Reserve. But the Federal Reserve does own U,S, debt as a result of buying previously issued debt from the public to collateralize currency.

Answer 3

Yes.

Answer 4

anything is expected for this government. no one can predict what they do. so it is possible.