Flats, you skipped over the important part.
>>Member banks must subscribe to stock in their regional Federal Reserve Bank in an amount equal to 3 percent of their capital and surplus. The holding of this stock, however, does not carry with it the control and financial interest conveyed to holders of common stock in for-profit organizations: It is merely a legal obligation that goes along with membership, and the stock may not be sold or pledged as collateral for loans.<<
I've got the US Code on CD-ROM on this computer, so I can give you the citation for anything and everything I am telling you, if you want it.
When the Federal Reserve was set up in 1913, by law each Federal Reserve bank was required to commence business with subscribed capital of at least $4 million. Each national banking association in a district was required to subscribe to the capital in the reserve bank in its district in an amount equal to 6% of the paid-up capital and stock of such bank.
"Equal to" is important here, because it means "no more than" as well as "no less than." Thus, no bank was able to subscribe to more than 6% of any district Reserve Bank.
Individuals, partnerships and corporations other than banks could subscribe to, or hold, stock in a district Reserve, but no more than $25,000 worth. This stock carries no voting power.
There was a provision that the U.S. Treasury would buy stock in the district Reserve Banks to make up the difference if any Reserve Bank stock was undersubscribed, but that was unnecessary.
The shares of stock in the district Reserve Banks are worth $100 each. When a member bank's own capital stock or surplus increases, it is required by law to subscribe to more stock in the district Reserve Bank - the statute says in the amount of 6%, but also says that the Board can change the percentage, so I assume that's why it's now only 3%.
By law, each bank is paid 6% per annum interest on the stock, and the rest of the earnings are retained in the surplus fund of the Reserve Bank. From time to time, at the discretion of the U.S. treasurer, such surplus is used to buy more gold reserves, or used to pay down the US debt.
None of this is secret, it's all in the United States Code. Title 12, Banks and Banking, Chapter 3, Federal Reserve System.
No lawyer would make the mistake of thinking that Class A Directors must mean that there are Class A shares. The statute is clear, Class A, Class B, and Class C refer to members of the district bank's Board of Directors.
>>12 U.S.C. § 302 - Number of members; classes.
Such board of directors shall be selected as hereinafter specified and shall consist of nine members, holding office for three years, and divided into three classes, designated as classes A, B, and C.
Class A shall consist of three members, without discrimination on the basis of race, creed, color, sex, or national origin, who shall be chosen by and be representative of the stockholding banks.
Class B shall consist of three members, who shall represent the public and shall be elected without discrimination on the basis of race, creed, color, sex, or national origin, and with due but not exclusive consideration to the interests of agriculture, commerce, industry, services, labor, and consumers.
Class C shall consist of three members who shall be designated by the Board of Governors of the Federal Reserve System. They shall be elected to represent the public, without discrimination on the basis of race, creed, color, sex, or national origin, and with due but not exclusive consideration to the interests of agriculture, commerce, industry, services, labor, and consumers.
U.S. Code 12 U.S.C. § 302<<
From the very beginning, no bank has owned more than 6% of the stock in a district Reserve Bank, and no individual has owned more than $25,000 worth of stock in a district Reserve Bank, which carries no voting rights.
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Parenthetically, the popular culture and urban legends which have sprung up around the Federal Reserve System are worthy of study. Incredible! |
