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Old 01-24-2013, 06:33 PM   #24
GRIFFIN
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Join Date: Mar 2008
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Quote:
Originally Posted by evolved View Post
The Fed isn't an office of the government. You can say all you want that they're in bed, but reflexively dismissing it based on that single idea, well, I would imagine you miss a lot of things, lol.
The Federal Reserve system was designed to be independent to limit political influence on monetary policy

Controlling the system and monetary policy in the U.S. is the responsibility of the Board of Governors of the Federal Reserve. Each member of the Board of Governors is selected by a President and confirmed by the Senate to serve 14 year terms. Twice a year, the Chairman of the Board of Governors must report to Congress and one of those times he presents an annual report that includes independently audited financial statements of the entire system. The Board of Governors is a 100% government agency.

The President also chooses who will be the Chairman and Vice Chairman of the Board of Governors. Members of the Board of Governors are not allowed to hold any office, position, or employment in any member bank. It is the primary responsibility of the Board of Governors to set monetary policy.

In addition to monetary policy responsibilities, the Federal Reserve Board has regulatory and supervisory responsibilities over banks that are members of the System, bank holding companies, international banking facilities in the United States, Edge Act and agreement corporations, foreign activities of member banks, and the U.S. activities of foreign-owned banks. The Board also sets margin requirements, which limit the use of credit for purchasing or carrying securities.

Beneath the Board of Governors, there are 12 Federal Reserve district banks. These are setup similar to corporations, but there are differences that make them sort of a hybrid between private ownership and a federal instrumentality. National banks that are located within a Federal Reserve district are required by law to subscribe to stock in a district bank. The amount of stock each member bank is to subscribe to is set by law to a certain percentage of their paid-in capital. Where a normal corporation has to follow certain procedures to issue shares of stock, the Federal Reserve district banks can issue additional stock whenever a member bank's capital increases or a new national bank is chartered. A state bank may subscribe to the stock if the state bank meets certain requirements. The stock can be thought of as representing a bank's membership in the Federal Reserve system.

Each share of stock has a set par value and that does not change. Each member bank pays the par value for the Federal Reserve district bank stock. The stock of a Federal Reserve bank does not confer any rights of ownership in the bank. The only benefits of the stock are: 1) pays a 6% dividend; and 2) each member bank has ONE vote for the district bank's board of directors. The dividend is to recompense the bank for the loss of use of it's capital. Each member bank gets one vote for six seats on the board of directors regardless of the number of shares that it holds. The other three seats on each bank's board of directors are selected by the Board of Governors. The Chairman and Vice Chairman of these boards of directors are selected by the Board of Governors.

If a Federal Reserve bank were to be dissolved, the member banks would be paid back the amount they paid for the stock plus any unpaid dividend regardless of the value of the Federal Reserve bank. All assets and liabilities would then become the responsibility and property of the U.S. Government. This is significantly different than a private corporation. If a private corporation dissolves, excess assets are distributed to the stockholders.

The Federal Reserve system is also "non-profit". Once expenses have been paid and the set dividend has been paid to the member banks, net earnings are paid to the U.S. Treasury.
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Quote:
Originally Posted by Hedges View Post
I can honestly say that because of Griffin, i am desensitized to alot of wierd stuff!

Last edited by GRIFFIN; 01-24-2013 at 06:35 PM.
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