The United States Government does own the Federal Reserve _System_, although it is "independent within the government." The United States Government does not own the 12 regional Reserve Banks. The Board of Governors of the Federal Reserve _IS_ a federal agency.
The United States Constitution gives Congress the power to coin money, and set the value of domestic money and foreign exchange: "To coin Money, regulate the Value thereof, and of foreign Coin." Congress delegated this power to the Federal Reserve system in 1913, by the Federal Reserve Act.
A number of other laws have been enacted to regulate the Federal Reserve - the Banking Act of 1935; the Employment Act of 1946; the 1970 amendments to the Bank Holding Company Act; the International Banking Act of 1978; the Full Employment and Balanced Growth Act of 1978; the Depository Institutions Deregulation and Monetary Control Act of 1980; the Financial Institutions Reform, Recovery, and Enforcement Act of 1989; and the Federal Deposit Insurance Corporation Improvement Act of 1991.
It is the duty of the Federal Reserve to accomplish the broad policy goals set by Congress, but without day to day oversight. It is independent from federal agencies.
This is the mandate of the Federal Reserve: "The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates."
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Member banks own stock in their own regional Reserve Banks, but do not control the Federal Reserve system. Shares of stock in regional Reserve Banks cannot be bought by or sold to the public. Shareholders in regional Reserve Banks receive 6% per annum dividend on their stock _after expenses_. Whatever is left over after the dividends are paid is transferred to the United States Treasury, e.g. the in 2000 the Reserve Banks paid $3.75 billion to the Treasury. The shareholders elect 6 of the 9 members of the regional Reserve Bank's Board of Directors. The Board of Governors appoints the three others. This is how each of the twelve Reserve Banks are structured.
The Board of Governors of the Federal Reserve _IS_ a federal agency. The seven members are appointed to fourteen year terms of office by the President with the advice and consent of the Senate. Here are the enumerated powers of the Board of Governors:
Enumerated powers.
(a) Examination of accounts and affairs of banks; publication of weekly statements; reports of liabilities and assets of depository institutions; covered institutions.
(b) Permitting or requiring rediscounting of paper at specified rate.
(c) Suspending reserve requirements.
(d) Supervising and regulating issue and retirement of notes.
(e) Adding to or reclassifying reserve cities.
(f) Suspending or removing officers or directors of reserve banks.
(g) Requiring writing off of doubtful or worthless assets of banks.
(h) Suspending operations of or liquidating or reorganizing banks.
(i) Requiring bonds of agents; safeguarding property in hands of agents.
(j) Exercising supervision over reserve banks.
(k) Delegation of certain functions; power to delegate; review of delegated activities.
(l) Employing attorneys, experts, assistants, and clerks; salaries and fees.
(n) Board's authority to examine depository institutions and affiliates.
(o) Authority to appoint conservator or receiver.
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The seven members of the Board of Governors and five representatives from the regional Reserve Banks serve on the Federal Open Market Committee. The Federal Open Market Committee regulates the open market activities of the regional Reserve Banks "with a view to accommodating commerce and business and with regard to their bearing upon the general credit situation of the country."
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To make a long story short, the regional Federal Reserve banks are chartered by Congress, are privately owned, but serve a public purpose; the Board of Governors is a government agency; but the Federal Reserve System is part of the Federal Government which is regulated by Congess but independent of day to day oversight. |
