The Federal Reserve is structurally owned and controlled by private member banks

Evidence

Here we encounter one of the major pieces of evidence that the Federal Reserve Bank is an avowedly neoliberal institution, and one that relies upon its major symbiotic relationship with the American economics profession to skew its membership in a neoliberal direction. I have just demonstrated that the last two chairmen of the Federal Reserve System were card-carrying neoliberals; but moreover, the entire governance structure of the Federal Reserve has evolved to guarantee responsiveness to its main constituency, the pinnacle of finance. As Dean Baker has written, few realize that “The Fed has been deliberately designed to insulate it from democratic control and leave it instead a tool of the financial industry.” The member private banks “own” stock in the regional Feds, and indeed, are paid dividends on their stock. The twelve regional Feds are governed by nine-member boards, six elected by member banks, and the remaining three by the Board of Governors. Each of the twelve regional Federal Reserve Banks is a separately incorporated not-for-profit that is privately owned by the member banks in its district. Further, the entire Fed system is self-funded from its operations, freeing it from the rigors of an external budgetary control or any serious accountability. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 522

Categorization

• XREF: Connects to the reader’s broader libertarian-skeptic literature on the Fed and to Bernanke’s standard defense that the Fed is a public institution; this structural argument cuts against both. — connects to: The Federal Reserve acted subservient to banks while posing as a regulator — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 2082; Foreign-backed monetary systems subordinate a state to that foreign country. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 369; Independent conservative central bankers can credibly commit against inflation where politicians cannot — Mark Blyth, Austerity: The History of a Dangerous…, 423 (+2 more)
• QUESTION: Worth verifying whether Fed regional bank stock ownership and the 1935 governance design are widely known facts or contested, since Baker’s framing claims few realize this.
• SHARE: A person who works in finance or teaches central banking would care about the specific 9-member boards, 6-3 split, and the nonrenewable 14-year terms detail.

Broader Connections

• Foreign-backed monetary systems subordinate a state to that foreign country. #expands (0.75) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 369
• Ordoliberalism institutionalized competition policy and an independent central bank against parliamentary control #qualifies (0.73) — Mark Blyth, Austerity, 364
• Independent conservative central bankers can credibly commit against inflation where politicians cannot #contradicts (0.72) — Mark Blyth, Austerity, 423
• Central bank independence was formalized to exempt economic policy from democratic control #qualifies (0.72) — Clara E. Mattei, The Capital Order, 71