Bear Stearns rescued by Fed and JP Morgan

[71tr]

You are correct in saying the stock of the Fed is owned by the 12 Fed regional banks. How do you then insist that this does not means, they own the Fed? When is a stockholder Not an owner of a company whose stock he owns?  Who owns them? President Bush? The Congress?  Could you please tell me or show me where it is authorized for the US government to issues stock? Bonds, yes; stocks, equity, no.

You misquote me.  What I said was the twelve regional banks issue stock that is owned by their member banks not that they own stock in the Fed.  The Fed is a government agency and hence issues no stock.  The closest thing it has to an owner would be the American taxpayer.  However, the 12 regional banks are stock corporations and their stock is owned by their member banks as a requirement of membership. 

[kemet]

71tr, if you do not have the intellectual curiosity to investigate my sources, we cannot continue this conversation. You keep making statements that are factually incorrect. The Fed is NOT a government agency, it is a private company owned by the 12 member banks. Its stock is owned by them and they are privately owned.

Here is a direct, if ambiguous quote from Donald J. Winn, Assistant to the Board of Governors of the Federal Reserve in response to a question from Congressman Shumway in 1983: "The Federal Reserve System was established by an act of Congress in 1913 and is not a ‘private corporation’." On the next page, Mr. Winn continues, "The stock of the Federal Reserve Banks is held entirely by commercial banks that are members of the Federal Reserve System."


Kind a hard to say the Fed is "not a private corporation" when he then says the "stock of the Fed is owned by commercial banks!" He just called himself a liar!

71 I know you won't read it, but for anyone who is open and intellectually curious, here is a great site to get tons of info on the Fed and what it is and isn't: http://www.apfn.org/apfn/reserve.htm


Bill

[Deal Hunter]

Well, I think the answer to this debate is whether or not 71tr considered himself a "civil servant" while working at the Fed?

Employees of government agencies are civil servants.  Is Ben Bernanke or any of the Fed chiefs a civil servant?  Do they understand that their paychecks are given to them by the tax payers?  I think not.  They are not answerable to the taxpayers or our elected representatives.

[71tr]

The Fed is NOT a government agency, it is a private company owned by the 12 member banks. Its stock is owned by them and they are privately owned.

Kemet, with all due respect your statement above is incorrect.  The only stock associated with the Federal Reserve System is that of the twelve regional banks.  They are organized as stock corporations and that stock is owned by their commercial bank members, on this you and I agree.  However, that is where the notion of stock owned private corporation ceases.  The Federal Reserve Board of Governors in Washington is not owned by the twelve regional banks as you claim, they are appointed by the President and they run the system as a government agency.  Obviously you do not believe my words so perhaps a third party reference would help.  http://en.wikipedia.org/wiki/Federal_Reserve_System

As for your quote from Donald Winn below if you read it carefully it makes perfect sense.  He clearly states that the "System" is not a private corporation but that the "Reserve Banks" (read regional banks) are stock corporations.  There is a distinction here that seems to be lost on you.  This is why the "Fed" is called a quasi-public organization, part of it is private (the regional banks) and part of it is government (the board of governors).

Deal Hunter, yes I will admit to having been a civil servant during my stint with the government.  Unfortunately for us bureaucracy has a way of shielding the players from accountability.

[Deal Hunter]

Part of the confusion also lies in the perception that the Fed's manipulation of interest rates does not constitute government intervention as in "fiscal" stimulus.  It's the classic contradiction of free market capitalists that continue to vehemently oppose government bail-outs and tax payer funded stimulus packages and yet welcome the constant manipulation of the dollar by the Feds.

George Soros has defended the (existence of) the Fed in the past by stating that it is not a government agency and therefore not a direct threat to free markets.   Of course Soros has also said that there is no such thing as a free market and that markets are "reflexive", subject to influence.

So if the Fed finally decides to just buy up subprime debt once and for all, that would not consitute a government bail out because the Fed did it without the prior approval or blessing of the President or the Congress??????