4 ms·

Federal reserve bank isn’t owned by the government. The federal reserve is owned by commercial banks who receive dividends. It does report to the government and

by meric 8y ago

Federal reserve bank isn’t owned by the government. The federal reserve is owned by commercial banks who receive dividends. It does report to the government and pays the treasury excess earnings. https://www.federalreserve.gov/faqs/about_14986.htm https://www.federalreserve.gov/faqs/about_14986.htm

dalbasal 8y ago
I wasn't referring to the US system in particular. But regardless of the particulars, there's a centralized core in US banking and in many other industries.
BinaryIdiot 8y ago
> The federal reserve is owned by commercial banks who receive dividends. This isn't correct by your own link's information (it says no one owns it). However the Federal Reserve is run by a government appointed group who then oversea the various Federal Reserve Banks, each of which are incorporated and have stock which is what the private banks own. It does seem a bit convoluted though.
- meric 8y ago
  Oh I thought stock implied ownership. Maybe it doesn’t mean that in this case.
  - BinaryIdiot 8y ago
    Not sure. I mean it might but that would be individual Federal Reserve Banks and not the Federal Reserve itself. I find it a bit confusing, heh.
  - stephen_g 8y ago
    The shares that the commercial banks own are pretty much entirely symbolic. I believe they have no voting rights, for instance. The US Government considers the federal bank “independent within the Government”. The Fed derives all its authority from the Federal Reserve Act, legislated by Congress, and it’s run by a board appointed by the President and confirmed by the Senate.
    - dd36 8y ago
      It’s like owning stock in the Green Bay Packers.
      - erichurkman 8y ago
        The Packers are the only publicly owned, non-profit team in the league [0]. They are effectively privately held shares: you can't sell them (you can gift them to family members only), you get no dividends, you get no rights except the ability to vote. It's the only reason the Packers are still in Green Bay: to move or sell, you'd have to convince 350,000 die hard Packers fans to vote in favor of a move/sale. It's one of my favorite stocks: I never have to worry if the value is going up or down. [0] https://en.wikipedia.org/wiki/Green_Bay_Packers,_Inc https://en.wikipedia.org/wiki/Green_Bay_Packers,_Inc.
        makomk 8y ago
        It was so effective at stopping anyone from buying up and moving the team, that the NFL banned any other teams from structuring their ownership this way. Which says something about who the game's really for I guess.
        dalbasal 8y ago
        Fantasic example, exactly the type of alternative structures that could make sense in artificial markets. I didn't know about this. One bit I'd nitpick is restricting the mission to non profit. Profits could still be good, if shareholders have the right to decide what to do with them. Non profit structures force you into spending "above the line" which muddles things by design. Having a profit is a useful health check, and profits can be spent in a more transparent way. Imagine such a structure owning street level retail real estate, a busy shopping street. Renting at market value to H&M produces more "profit" than renting at reduced prices (or free) to a community op shop. There's a trade-off that the "owners" might make, if they would like to buy more real estate or whatnot.
        erichurkman 8y ago
tallanvor 8y ago
The Federal Reserve system is quite complex, but the 12 banks are not owned by the banks. They are chartered and organized by the US government, so they can't change their mission without convincing the government to change the laws around them. Nationally chartered banks are required to be members of one of the Federal Reserve Banks, and have to own "stock" equal to 3% of their capital and surplus. State chartered banks are not required to be members, but may do so under different rules. The banks receive a 6% divided of their stake, with the remaining profits going back to the government. The numbers aren't clear, but it looks like the system made over $92 billion for their 2016 year, and over $91 billion of that went to the government.

by meric 8y ago

dalbasal 8y ago

I wasn't referring to the US system in particular. But regardless of the particulars, there's a centralized core in US banking and in many other industries.

BinaryIdiot 8y ago

> The federal reserve is owned by commercial banks who receive dividends. This isn't correct by your own link's information (it says no one owns it). However the Federal Reserve is run by a government appointed group who then oversea the various Federal Reserve Banks, each of which are incorporated and have stock which is what the private banks own. It does seem a bit convoluted though.

meric 8y ago
Oh I thought stock implied ownership. Maybe it doesn’t mean that in this case.
- BinaryIdiot 8y ago
  Not sure. I mean it might but that would be individual Federal Reserve Banks and not the Federal Reserve itself. I find it a bit confusing, heh.
- stephen_g 8y ago
  The shares that the commercial banks own are pretty much entirely symbolic. I believe they have no voting rights, for instance. The US Government considers the federal bank “independent within the Government”. The Fed derives all its authority from the Federal Reserve Act, legislated by Congress, and it’s run by a board appointed by the President and confirmed by the Senate.
  - dd36 8y ago
    It’s like owning stock in the Green Bay Packers.
    - erichurkman 8y ago
      The Packers are the only publicly owned, non-profit team in the league [0]. They are effectively privately held shares: you can't sell them (you can gift them to family members only), you get no dividends, you get no rights except the ability to vote. It's the only reason the Packers are still in Green Bay: to move or sell, you'd have to convince 350,000 die hard Packers fans to vote in favor of a move/sale. It's one of my favorite stocks: I never have to worry if the value is going up or down. [0] https://en.wikipedia.org/wiki/Green_Bay_Packers,_Inc https://en.wikipedia.org/wiki/Green_Bay_Packers,_Inc.
      - makomk 8y ago
        It was so effective at stopping anyone from buying up and moving the team, that the NFL banned any other teams from structuring their ownership this way. Which says something about who the game's really for I guess.
      - dalbasal 8y ago
        Fantasic example, exactly the type of alternative structures that could make sense in artificial markets. I didn't know about this. One bit I'd nitpick is restricting the mission to non profit. Profits could still be good, if shareholders have the right to decide what to do with them. Non profit structures force you into spending "above the line" which muddles things by design. Having a profit is a useful health check, and profits can be spent in a more transparent way. Imagine such a structure owning street level retail real estate, a busy shopping street. Renting at market value to H&M produces more "profit" than renting at reduced prices (or free) to a community op shop. There's a trade-off that the "owners" might make, if they would like to buy more real estate or whatnot.
        erichurkman 8y ago

tallanvor 8y ago

The Federal Reserve system is quite complex, but the 12 banks are not owned by the banks. They are chartered and organized by the US government, so they can't change their mission without convincing the government to change the laws around them. Nationally chartered banks are required to be members of one of the Federal Reserve Banks, and have to own "stock" equal to 3% of their capital and surplus. State chartered banks are not required to be members, but may do so under different rules. The banks receive a 6% divided of their stake, with the remaining profits going back to the government. The numbers aren't clear, but it looks like the system made over $92 billion for their 2016 year, and over $91 billion of that went to the government.