This article is in two parts and I will shortly update my article "The Money Matrix - Who Owns the FED (PART 7/15)". The first part consists of email excerpts with Ms. Debra LaBarbera from the department of Media Relations and Public Affairs for the Federal Reserve Bank of New York, who kindly took the time to reply to my inquiries. As I have noted elsewhere, although I have written very close to a hundred letters (in my view, the majority overly respectful), to my California Congresswoman, I never been deigned worthy of a response, but the Federal Reserve has, I must say, always responded.
The second part consists of some guesswork (which I explain and submit to you for your review and criticism) to estimate the percentage of share ownership of the major banks that own the private stock in the Federal Reserve Bank, the quasi-private banking cartel that runs America's central bank.
Me: Could you please assist me on a couple questions?
1) I am aware that the Federal Reserve may purchase or sell Treasuries from its primary dealers. Can the Federal Reserve purchase these directly from the Treasury Department? If so, has this ever occurred before? Why would the Federal Reserve purchase these from the primary dealers and not the Treasury Dept?
2) Could you please send me a list of member banks for the Federal Reserve Bank of New York, 2nd district? If a list of member banks for other districts is available, I would appreciate it if you could send me these as well.
LaBarbera: Thank you for your recent inquiry. The Federal Reserve, as the banker for the Treasury Department, issues transfers, redeems and pays interest on US Government securities. Also, the Fed will make interest payments or pay off maturing obligations such as Treasury notes, bonds, and bills.
Also, when securities in the SOMA portfolio [SOMA = System Open Market Account, or those charged with implementing OMO, or Open Market Operations (creating or destroying money from thin air) from the FOMC, or Federal Open Market Committee - Jake] mature the Desk determines whether to reinvest the maturing proceeds into new Treasury debt issued at primary auction, or to redeem the maturing proceeds. Typically the proceeds are reinvested, which would maintain the size of the SOMA portfolio and therefore the size of the permanent reserve-adding nature of the portfolio.
Whereas, the Fed purchases and sells securities directly from primary dealers in order to influence the volume of money and credit in the economy. So when the Fed sends and receives funds from the primary dealer's account at its clearing bank, this action adds or drains reserves to the banking system.
For more information on Open Market Operations I recommend our Fedpoint, found on our website at the link below:
[link edited for length]
A list of commercial banks in the United States can be found on the Board of Governors website at the link below. Please be advised, that this is a list of all commercial banks, which includes non-member banks. The column title "Charter" designates the banks and you will be able to determine which banks are members.
[link edited for length]
Let me know if you have any questions.
Me: Thank you very much for your reply! Only one of my initial questions remains. Can the Federal Reserve lawfully purchase or sell Treasuries directly with the US government - ie not involve the primary dealers? Has this ever happened before in the history of the Federal Reserve?
LaBarbera: Yes, when proceeds are reinvested, the auctions are directly with the Treasury not primary dealers.
So, the answer to a question that readers have asked me here "The Money Matrix - How the FED Works (PART 6/15)" is that YES, the FED may transact Treasuries directly with the Treasury Department but typically does not do this except in the event of refunding its earnings from its Treasuries back to the government (as explained here) since these transactions are typically done with the primary dealers (list here) such as JP Morgan (NYSE:JPM), Goldman Sachs (NYSE:GS), Citigroup (NYSE:C) to manipulate, and usually increase, the money supply of dollars, which is the Austrian definition of inflation. However, please be wary as in today's economic times "typically does not" typically does not apply!!
Now, why are these Treasuries transactions important for you? Please allow a short digression.
Over the long-term to the average American, this shows up as increases in prices of goods and devalues the purchasing power of their salaries even if the nominal number of salary dollars is increasing. A great writer I follow, James Quinn, recently published an interesting set of graphs in this article "As General Motors Goes..." where he demonstrates that from 1947 until 1970 real American median incomes rose by 3.7%, but from 1979 until 2006 real American median incomes only rose by 0.3%. While money supply increases by the FED masked this drop, it also masked the hollowing out of America's manufacturing base.
For no matter how important the jobs of teachers, doctors, policemen and firefighters are, the only way to increase the wealth of a nation is to generate higher amounts of goods (and yes, services also have a supporting role). As Peter Schiff mentions in his latest "Obama Puts the Economic Cart Before the Horse," if a fairy godmother showed up and gave all of us as many dollars, or Federal Reserve Notes, as we desired, we would very quickly find that we would be unable to increase our wealth at all! Hypothetically, if the supply of dollars were held constant and the overall manufacturing efficiency rose due to capital accumulation from true savings, the purchasing power of each dollar would rise, giving birth to the saver's benefit and central banker's horror, for this is what they widely refer to as "deflation." Per bls.gov, in January 2009 America, with a workforce 140-million strong, is now in the ridiculous situation of having those with manufacturing jobs (12.7 million) vastly outnumbered almost 2:1 by our (economically-speaking) non-value-added government employees (22.5 million).
Now back to the shareholders of the FED. As the FED highlighted in "The Money Matrix - Who Owns the FED (PART 7/15)":
As of March 2004, of the nation's approximately 7,700 commercial banks approximately 2,900 were members of the Federal Reserve Systema - approximately 2,000 national banks and 900 state banks. Member banks must subscribe to stock in their regional Federal Reserve Bank in an amount equal to 6 percent of their capital and surplus.
Therefore, if one knew all of the Federal Reserve members, plus their "capital and surplus" you could calculate the stock ownership of each bank in the FED. In the link, LaBarbera supplied, she is actually incorrect in that this is a list of "all commercial banks" as of December 2008. It is only a list of those US FDIC-insured commercial banks with consolidated assets of $300 million or more. Per page 9/40 of the FDIC's September 2008 quarterly, the total assets of the 7,146 commercial banks was $12.1 Trillion, while the list provided by the FED has 1,716 banks with consolidated assets of $11.1 Trillion. From this information, I conclude that remaining 5,000-odd banks' assets will not be terribly significant as the list LaBarbera sent covered >92% of the FDIC total. Per the FDIC, the remaining 1,238 savings institutions only account for another $1.5 Trillion, and are not consequential compared with the commercial banks.
If you accept this premise, then the great thing about the list is that if you remove all of the state non-member banks (marked 'SNB'), what you are left with is a list of the 771 key members of the Federal Reserve System. What I did next was consolidate the major banks as a few of the top members such as Bank of America Corporation and Wells Fargo and Company had multiple line items.
Now, the work completed can only be an approximation, and just being a silly engineer and not a banking expert, I have also made a bit of leap in equating the assets from LaBarbera's source with the banks' capital and surplus. I would appreciate if there are any comments on the validity of this. I decided to use the domestic assets, not the consolidated (international) assets. The only effect on the data is that this significantly reduces the overall influence of JP Morgan Chase Bank and Citigroup, which hold large amounts of oversea assets, as can be seen below.
So, from the above, note that the top 4 banks Bank of America (NYSE:BAC), JP Morgan Chase, Citigroup, and Wachovia, would control roughly 50% of the stock of the Federal Reserve Bank, and the top 10 banks, including Wells Fargo (NYSE:WFC), HSBC (HBC), and the Bank of New York (NYSE:BK), would control over 68% of the stock which is shown by the graph I put together below.
Of course, as I explained, stock ownership in the FED does not confer control over the FED, but it is just more information pointing at the entire immoral cartel. For the list of primary dealers above also includes Bank of America, JP Morgan Chase, Citigroup, and HSBC.
Comments, thoughts? I'll share my Excel file with anyone else wanting to take a look.