Each of the Federal Reserve banks is a quasi-public (part private, part government) institution owned by the private commercial banks in the district that are members of the Federal Reserve system.
Federal reserve banks are not federal instrumentalities for purposes of a Federal Torts Claims Act, but are independent, privately owned and locally controlled corporations.
According to the Federal Reserve Act, a Federal Reserve bank is a special type of corporation chartered by the Federal government. Shortly after the act was passed, the United States was divided into twelve districts and a Federal Reserve bank was organized in each district. National banks (private commercial banks chartered by the Federal government) were forced to join the Federal Reserve system. State chartered banks could join if they chose, though most did not. Any newly chartered national bank must still join the system and existing or new state chartered banks can still choose to join.
One requirement of membership was for a bank to purchase stock in its district Federal Reserve bank. The amount purchased was fixed by the Act. Each member bank must purchase stock equal to 3% of its capital.
Take a bank's total assets — vault cash, loans, investments, building, and equipment. Then subtract its liabilities — checking accounts, savings accounts, bonds. The difference is the bank's capital, which, in banking lingo, is another term for net worth. Multiply by 3% and that is the dollar value of the Federal Reserve stock a bank must hold.
The par value of the Federal Reserve stock was fixed by the Act at $100 per share. As a bank's net worth changes and deviates from the 3% requirement, its Federal Reserve bank issues it new shares or buys back excess shares — always at the $100 par value. If any bank joins the system, its district Federal Reserve bank issues new shares. If any member bank fails, its district Federal Reserve bank pays off the shares.
All member banks are U.S. chartered banks — chartered by the federal government as national banks, or by one of the states. However, the stockholders of the various banks can be U.S. citizens or foreigners.
So, private investors, including foreigners, own the member banks which in turn seem to own Federal Reserve banks.
Did you ever admit your previous error, you know, "we pay the Fed $1 trillion each year"?
Yes or no?
However, the stockholders of the various banks can be U.S. citizens or foreigners.
So, private investors, including foreigners, own the member banks which in turn seem to own Federal Reserve banks.
Excellent! I knew that Bank of America stock would come in handy.