MORE ON THE FED RESERVE FRAUD..... I recently decided to ask the FED itself, about it's private ownership. After a couple of tries I got to the legal division of the Board of Governors. I told them that I was looking for something in "clear" language that speaks to the fact that the Federal Reserve Banks are privately owned. What follows is their reply. It came on one legal size sheet with Federal Reserve letterhead. There is a seal of The Board of Governors which looks very much like, but is not identical to the seal of the United States in the upper left corner. I have typed the letter word for word except for a numbered notation that I place at the end of a sentence that I have a question about. The notations look like this: <<1>> ... <>. After the Federal Reserve's letter I pose several questions relating to the notated statements. I have always found it interesting that 9 out of 10 people believe the Federal Reserve Banks are part of the federal government (most often the U.S. Treasury), and that the idea that the Banks are privately owned is incredible to almost everyone. Although, it is not stated directly, the letter indicates private ownership. It also seems to say, again not directly, that the Federal Reserve Banks "owners" do not make a profit. What do you think? ________________________________________________________________ QUOTE: Board of Governors of the FEDERAL RESERVE SYSTEM Washington, D.C. 20551 THE FEDERAL RESERVE SYSTEM The Federal Reserve is the Nations central bank. It was created by an Act of Congress on December 23, 1913. The Federal Reserve System consists of a seven-member Board of Governors (an independent agency of the federal government with headquarters in Washington, D.C.), plus a nationwide network of 12 Federal Reserve Banks and 25 Reserve Bank branches. <<1>> The Federal Reserve Banks were established by congress as an operating arm of the nation's central banking system, and they have both public and private elements. The Federal Reserve Banks were established by Congress for a public purpose. In addition to providing a variety of financial services to the U.S. Treasury, financial institutions and the public, the Reserve Banks act as vital sources of information about the economy and financial development in all parts of the nation. Key to this activity is the Bank's Board of Directors which is made up of nine private citizens who come from many walks of life and add their experience and expertise to efficient operations of the Reserve Banks. Six of these Directors are elected to their posts by the member commercial banks who, under law, must subscribe to stock in their regional Federal Reserve Bank. Member commercial banks include all national banks and those state banks who chose to become members. Ownership to Reserve Bank stock is in the nature of an obligation that goes along with membership and does not carry with it any characteristics of control or financial interest normally attached to stock in a corporation. <<2>> The amount of stock that member banks are required to purchase is specified by law. The stock may not be sold or pledged as collateral for loans, and dividends are limited by law to 6 percent per year. <<3>> If a Reserve Bank were liquidated, any funds remaining after the payment of bills would revert to the U.S. Treasury. Neither the Board nor the Reserve Banks receive appropriations from Congress. Therefore, they do not operate with tax revenues but rather pay expenses out of earnings. Earnings of the Federal Reserve Banks are derived primarily from interest received on their holdings of U.S. Government securities and on the fees they charge depository institutions for providing services such as the processing and clearing of checks. <<4>> After payment of expenses, contributions to surplus, and payment of other assessments, all the net earnings of the Federal Reserve Banks are aggregated and paid over to the U.S. Treasury. In 1992, for example, the Federal Reserve paid $16.8 billion to the U.S. Treasury. <<5>> The financial accounts of the Board of Governors are audited each year by an independent firm of certified public accountants. In addition, Congress has authorized the U.S. General Accounting Office to conduct audits of the Federal Reserve. Also, each Reserve Bank has a General Auditor who reports to the Bank's Board of Directors regarding audit activities, and the Board of Governors, in exercising supervision of the Reserve Banks, conducts an annual examination of each Bank. <<6>> The U.S. Congress has ultimate authority over the Federal Reserve and oversees the activities of the Federal Reserve through appropriate committees. The Board of Governors is required by law to report to Congress annually on the Federal Reserve's activities. With respect to monetary policy, the Federal Reserve is required by statute to report to Congress twice a year on its plans and objectives. Members of the Board, particularly the Chairman, are frequently requested by Congressional Committees to testify on financial and economic issues. ###### END QUOTE: Below are several questions I have as to how to interpret this letter. Any light you can shed on these or any other questions you may see will be greatly appreciated. <<1>> The Federal Reserve System consists of a seven-member Board of Governors (an independent agency of the federal government with headquarters in Washington, D.C.), plus a nationwide network of 12 Federal Reserve Banks and 25 Reserve Bank branches. Questions: a) How are the Board of Governors selected? b) How long are their terms? c) Legally speaking what is "an independent agency of the federal government"? <<2>> Ownership to Reserve Bank stock is in the nature of an obligation that goes along with membership and does not carry with it any characteristics of control or financial interest normally attached to stock in a corporation. Questions: a) This sounds like a very "unprofitable" type of stock. Is there some other means by which title 12 allows the Federal Reserve Bank owners to profit? b) What is meant by "Ownership to Reserve Bank stock is in the nature of an obligation..."? <<3>> The amount of stock that member banks are required to purchase is specified by law. The stock may not be sold or pledged as collateral for loans, and dividends are limited by law to 6 percent per year. Questions: a) How much stock must a member bank purchase? b) If the stock cannot be sold, what then, of Bo Gritz's claim that all the Federal Reserve stock could be purchased back by the U.S. Treasury for the original purchase price? c) How much does the 6 percent per year amount to? <<4>> Earnings of the Federal Reserve Banks are derived primarily from interest received on their holdings of U.S. Government securities and on the fees they charge depository institutions for providing services such as the processing and clearing of checks. Questions: a) Are Federal Reserve Notes considered "U.S. Government securities"? b) What secondary sources of revenue are there? <<5>> After payment of expenses, contributions to surplus, and payment of other assessments, all the net earnings of the Federal Reserve Banks are aggregated and paid over to the U.S. Treasury. In 1992, for example, the Federal Reserve paid $16.8 billion to the U.S. Treasury. Questions: a) What are "contributions to surplus"? b) What "other assessments"? Is this apart from expenses? c) Considering that the interest on the national debt is several hundred billion dollars, isn't $16.8 billion a small amount to be left over after expenses, etc..etc? <<6>> The financial accounts of the Board of Governors are audited each year by an independent firm of certified public accountants. In addition, Congress has authorized the U.S. General Accounting Office to conduct audits of the Federal Reserve. Also, each Reserve Bank has a General Auditor who reports to the Bank's Board of Directors regarding audit activities, and the Board of Governors, in exercising supervision of the Reserve Banks, conducts an annual examination of each Bank. Questions: a) I have heard several times in various news groups that the Federal Reserve Banks do not have to stand audit. This paragraph seems to soundly controvert that idea. I was under the impression that Gonzales's bills, currently before Congress, call for a power of audit over the Federal Reserve System. ******************************************************************* FOR A LIST OF PATRIOT/ANTI-NEW WORLD ORDER FILES AVAILABLE ON THIS BBS, DOWNLOAD NWOFILES.TXT [on some systems, NWOFILES.ZIP]; OR DOWNLOAD THIS INDEX, PLUS THESE FILES, FROM CRS ONLINE, TORONTO. YOU ARE ENCOURAGED TO WIDELY RE-POST THESE FILES TO OTHER BBS SYSTEMS! *****************************************************************