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When a simple question has such a complicated an inconclusive answer, that's a good indication that the bivalent conceptual scheme of "private" vs. "public" is too crude to characterize the hybrid nature of the Fed.
But this quote among others:
"…Should a Federal reserve bank be dissolved or go into liquidation, any surplus remaining, after the payment of all debts, dividend requirements as hereinbefore provided, as the par value of the stock, shall be paid to and become the property of the United States and shall be similarly applied."
is pretty telling as far as a way of understanding the extent of the government interest.
Although the use of the term "stock" for the shares held by member banks in the regional Fed banks is something of a euphemism. For one thing, this stock is held by the banks themselves rather than individual stockholders. And unlike ordinary stock, it can't be sold. I think it is better to think of this so-called stock as something closer to a membership fee that banks pay into the Fed system for the privilege of being part of that system, a fee proprtioned to the size of their capitalization. And the annual "dividends" they receive each year - fixed by law (not mamangement discretion) at 6% of the paid-in amount - are a kind of annual member benefit.
From the post it seems that the issue is not so much economic but legal, since the purpose of the banks is to carry out the monetary policy iaw the BOG, which is federal and administer the payments system.
But if the 12 regional federal reserve banks are private entities, they aren't covered by the FOIA. That's significant, especially in the case of the FRBNY.
3 comments:
When a simple question has such a complicated an inconclusive answer, that's a good indication that the bivalent conceptual scheme of "private" vs. "public" is too crude to characterize the hybrid nature of the Fed.
But this quote among others:
"…Should a Federal reserve bank be dissolved or go into liquidation, any surplus remaining, after the payment of all debts, dividend requirements as hereinbefore provided, as the par value of the stock, shall be paid to and become the property of the United States and shall be similarly applied."
is pretty telling as far as a way of understanding the extent of the government interest.
Although the use of the term "stock" for the shares held by member banks in the regional Fed banks is something of a euphemism. For one thing, this stock is held by the banks themselves rather than individual stockholders. And unlike ordinary stock, it can't be sold. I think it is better to think of this so-called stock as something closer to a membership fee that banks pay into the Fed system for the privilege of being part of that system, a fee proprtioned to the size of their capitalization. And the annual "dividends" they receive each year - fixed by law (not mamangement discretion) at 6% of the paid-in amount - are a kind of annual member benefit.
From the post it seems that the issue is not so much economic but legal, since the purpose of the banks is to carry out the monetary policy iaw the BOG, which is federal and administer the payments system.
But if the 12 regional federal reserve banks are private entities, they aren't covered by the FOIA. That's significant, especially in the case of the FRBNY.
it's interesting that the dividend was set at 6%... statutory r>g.
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