Why have them privately controlled at all? The fed prints the money. The fed could be the bank and insurer as well, and obviate the middle men skimming the pot.
Funny. The USA seems to have the complete opposite view to yours! :D
The Federal Reserve is just about as close to a private company as any, running your entire economy. Certainly it's a for profit venture. But then that's profits funneled away from public coffers, and not to it.
Sure, the Fed has a pretty clear mandate from the Congress, deputizing them into a certain public role, but other than that, they receive little to no ‘advice’ on how to do things, and stand free to make private profit for a small cartel of privately owned banks.
The reason for this non-public setup is so that Congress won't simply print more money at will, which would be far worse.
The Fed is technically a privately owned entity, which is really a caba of banks (banks in the US 'own shares' in the Fed and basically run the show). It's at arms length form congress - as it should be - for monetary operations.
But for regulatory issues?
The US let's a group of banks 'self regulate' - moreover regulate other industries?
The seems kind of crazy to me.
I see the need for 'smart regulation' esp. by bodies that are as 'independent' as possible, but in this case 'independent' could mean 'conflict of interest' which is kind of the opposite of what we would want, no?
While I agree with your point, YSK that your examples don't support it.
Congress does outsource the Fed to the big banks, including Chase and Wells. [1] That's how the US Federal Reserve system works. Congress (through its appointed board of governors) sets goals, and the regional privately incorporated Federal Reserve Banks act towards those goals at their own discretion. The Regional Feds pay taxes, own property, etc just like any other private corporation. Principal shareholders are the biggest banks, including Chase, Wells, Goldman, Bank of America, etc. Apart from the power of the position, the banks profit by the mechanism of "printing money" in the US: Congress creates new bonds and treasury notes and gives them to the Feds, whose shareholders earn interest and fees on those bonds/T-bills. You would not be the first to worry that this is the fox guarding the hen house.
The SEC however, is a government organization... which outsources the bulk of its regulatory responsibilities to a private association of stock exchanges and broker-dealer banks (including Chase and Wells) called FINRA. [2] The principle of "self-regulation" has been a cornerstone of the SEC since its founding. Here, too, there is considerable debate about whether self-regulation is a good idea in the age of private exchanges, dark pools, rapidly-multiplying derivatives, etc.
I don't know what this does to your impression of the Fed or the SEC being fair and balanced. But you should definitely think about it every time you see discussion of the unequal impact of monetary policy, or a million dollar fine for an SEC violation worth billions.
The fed is quasi public too? It’s actually less public than the postal service, the postal service is a fully public agency, the fed is partially governed by private banks.
> The bank is also privately owned and not by any government.
Each of the Federal Reserve banks is structured on paper as a private corporation, yes. But the US government effectively controls what they do; the private corporations do not exercise any of the normal functions of ownership that other private corporations do.
It has mandatory non-voting non-transferable shares. That is, when you fund a bank, you have to buy in at the regional Fed. Why? Who knows, it's a law on the books, and it's basically mindless administration. It does not make it "owned" in any sense.
The Fed is established by an Act of Congress, directly reports to Congress, and every aspect of the Fed's rights and duties is directly spelled out in laws.
If you do a FOIA request for ownership structure, you'll get nothing, because there's no such thing. The Fed is not owned by anyone, it's an independent-from-the-WhiteHouse US agency. It has a budget (and is self funded, from the interests of the securities/assets it holds), it has expenses for staff and for the cost of providing services, it then gets reimbursed from the Treasury for certain services, etc. ( https://www.federalreserve.gov/foia/files/2018ReserveBankBud... ) And it pays out 6% to the member banks, who are mandated by law to have equal to 3% of their capital in Fed Regional Bank "shares".
There's one instance where the regional fed banks can be thought of as "private": from the perspective of the FTCA [the Federal Tort Claims Act].
See also Scott v. Federal Reserve Bank of Kansas City, in which the distinction is made between Federal Reserve Banks, which are federally created instrumentalities, and the Fed Board of Governors, which is a federal agency.
Nonetheless, given that the individual regional banks are have directors that are elected by the member banks, control over certain levels of fed policy are in a sense private, whereas that is nowhere true for the postal service. At least not to my knowledge.
The FED is definitely privately owned. It's a private company with a share structure. Most banks in America have a share in it - or rather the regional bank.
" Although parts of the Federal Reserve System share some characteristics with private-sector entities, the Federal Reserve was established to serve the public interest."
Don't be so naive. A private company tells you 'they are to server the public interest' and you believe them?
Listen - I'm not a conspiracy theorist. Generally speaking, the Fed is much like other central banks. But make no mistake - it is not a public entity.
Try this: the US government does not have access to the financial records of the Fed. Congress wanted to do an audit of the Fed - and they were blocked from going back past 2004.
Think about that. The US currency system is controlled by an entity that will not let the public see what's in their records.
That's insane.
My bet is that from 1913 to past the Nixon era there is crazy, crazy stuff on the books, and confidence in the US currency would go crazy if that information got out.
Also - just because it does not generate a profit does not mean that it's not used for the benefit of the banks. They set interest rates that suit their interest, not necessarily the interest of the general public.
The Federal Reserve is a private entity in the same sense as the Postal Service. They're not private in the same way as a normal bank; nobody becomes rich just because the Federal Reserve has more assets.
Because in a democracy, effectively granting the legislature the power to print money and hand it to citizens is fraught with some pretty obvious conflicts of interest.
(yes I know the Fed is “independent” but it is the tail on a government dog—the two are separated only in name)
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