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Frequently asked questions

Q1: Is the Federal Reserve private or public/governmental?

A1: The Federal Reserve is not one entity but several, and each has its own status in relation to the government. The Board of Governors, which supervises the system, is a federal government agency. The twelve Federal Reserve Banks are privately owned corporations organized under the Federal Reserve Act that have public responsibilities. They are not organized under the laws that govern other private corporations, such as for-profit businesses.

Q2: Who owns the Federal Reserve?

A2: There are multiple answers depending on which part of the Federal Reserve is meant.

The Board of Governors is a government agency that uses government-owned facilities.
Each Federal Reserve Bank is owned by the member banks in its region. That ownership entitles them to receive limited dividends and to vote for some of its directors.
The government receives the Federal Reserve Banks' excess earnings (profit).

Q3: Does the court case Lewis v. United States (1982) prove that the Fed is a private bank?

A3: Lewis v. United States held that a man injured by a Federal Reserve Bank's vehicle could not sue the federal government for damages. The court decided that for the purpose of a tort claim, the Reserve Bank was not a federal agency, because the government did not control its detailed activities and day-to-day operations. The decision noted that in other cases, for other legal purposes, courts have treated Reserve Banks as government-affiliated entities.

Q4: Why is the structure of the Federal Reserve so complicated?

A4: The structure reflects the development of the Federal Reserve over time from a regional system into a de facto centralized system. The original Federal Reserve Act provided for banks to cooperate with each other and the government on a regional basis to meet credit demands. This was intended to prevent banks in more commercial parts of the country from dominating others. Each Federal Reserve Bank managed credit within its region, while the Board carried out regulatory and policy functions. (House Report 69 (1913), pp. 17–19). The Banking Act of 1935 increased the authority of the Board and the status of the Reserve Bank of New York, while reducing the role of the other Reserve Banks.

Q5: Does the Federal Reserve have a connection with federal income tax?

A5: Yes. The Federal Reserve Act and the first "modern" income tax were both enacted in late 1913 by Woodrow Wilson, who saw them as ways to strengthen the federal government against the large business interests of the time. Although they were enacted around the same time, each proposal had its own separate political history. Additionally, the Federal Reserve processes payments for the federal government. Therefore, any payment to the US Treasury (including income tax) is eventually deposited to the Treasury's account at the Federal Reserve Bank of New York and becomes part of the government's operating cash.

Q6: Does the Federal Reserve have a connection with the national debt?

A6: Yes. The Federal Reserve Banks are significant owners of federal debt securities, about $5.6 trillion or 18% of the debt as of June 2022. They draw part of their income from these holdings, which they use to pay their expenses and dividends before remitting their earnings to the Treasury. The Federal Reserve Bank of New York also conducts (but does not participate in) auctions of new federal debt securities. Fiscal policy — how the government raises and spends money — is decided by Congress, not by the Federal Reserve.

Q7: Did Woodrow Wilson regret creating the Fed?

A7: No. A supposed regretful quote from him ("I am a most unhappy man...") is assembled from words that he said and wrote, but not about creating the Fed. See the Wikiquote page for Wilson.

Q8: I have a book/web site/video that contradicts these answers.

A8: Works claiming that the Federal Reserve is the creation of a sinister banker conspiracy have been raised here many times before. There are separate articles about writers and works that make such claims, like G. Edward Griffin and America: Freedom to Fascism. However, they are not mentioned in this article, because they are not widely acknowledged among authors who write about the Fed, even to criticize it. Wikipedia aims to fairly represent the significant points of view on a subject but not to promote fringe theories held by a tiny minority of adherents.

Q9: Where can I find more answers about the Federal Reserve?

A9: The Board of Governors has its own frequently asked questions list.

The subject of this article is controversial and content may be in dispute. When updating the article, be bold, but not reckless. Feel free to try to improve the article, but don't take it personally if your changes are reversed; instead, come here to the talk page to discuss them. Content must be written from a neutral point of view. Include citations when adding content and consider tagging or removing unsourced information.

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Intro Paragraph Misleading

I had edited one portion of your first sentence to accurately reflect the truth about how and why the Federal Reserve Bank was imposed upon the American people. The misleading part is in bold below.

"The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States. It was created in 1913, with the enactment of the Federal Reserve Act, and was largely a response to prior financial panics and bank runs, the most severe of which being the Panic of 1907.[1][2][3]"

This is completely inaccurate. The banking interests that pushed for the central bank did so strictly out of a desire to be able to control their ability to expand fractal banking. They simply pointed to recent financial crises as a duplicitous justification, and this is how the myth was born that the Federal Reserve Bank was implemented to "help" control an otherwise volatile economy. In fact, all previous crises and bank runs were born from fractal banking to begin with. The very institution that was and is supposed to be helping us is causing the problems. Please refer to http://mises.org/books/fed.pdf for verification.

This article has been bastardized by adding the following. Please correct and lock the article for further editing:

Destroying the nation's economy by influencing monetary and credit conditions in the economy in pursuit of maximum unemployment, high unstable prices, and short-term bubbles which burst if you blow on the them too hard. Supervising and regulating banking institutions to ensure the unsoundness of the nation's banking and financial system, and protect failing companies that should go bankrupt. Maintaining a failing financial system and taking away the risks that arise in financial markets that self-regulate greed and Malinvestment. Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including maintenance costs of Ben Bernanke's Helicopter. —Preceding unsigned comment added by Goganess (talk • contribs) 08:14, 23 January 2010 (UTC)[reply]

Lewis v. United States 1982

In Lewis v. United States, 680 F.2d 1239 (9th Cir. 1982). the court stated "Examining the organization and function of the Federal Reserve Banks, and applying the relevant factors, we conclude that the Reserve Banks are not federal instrumentalities for purpose of the FTCA, but are independent, privately owned and locally controlled corporations.”

http://home.hiwaay.net/~becraft/Lewis_v_US.htm http://www.nesara.org/court_summaries/lewis_v_united_states.htm

I inserted a quote from a court case. This is NON DISPUTABLE. How can ypu dispute a quote from the court? —Preceding unsigned comment added by 67.249.74.255 (talk) 00:14, 3 December 2009 (UTC)[reply]

Did you read any of the discussions linked just above this, in a section about your posts? I don't think so, so I ask you to read them, as they answer your question in detail. It's not the first time that's been asked. Ravensfire (talk) 00:17, 3 December 2009 (UTC)[reply]

It doesn't matter. You cannot dispute a quote. A quote is a quote. Period. 67.249.74.255 (talk) 00:23, 3 December 2009 (UTC)[reply]

Such a response! So kindly show me where, in that quote, it says that Board of Governors, or Open Market Committee are private, please. Alas, it doesn't. IP, you need to read those discussions. Your question is answered in there, so I will not post further here. Ravensfire (talk) 00:29, 3 December 2009 (UTC)[reply]

(Edit Conflict) "You cannot dispute a quote. A quote is a quote." See my response in the prior question, and Ravensfire's posted links. Your statement is incorrect. There are many, many circumstances in which a quote is insufficient for an addition to an article. Prior discussions (previously linked) do just that. I'll further state that changing your addition does not change the rules of WP:3RR, either - further reinsertions on your part without WP:CONSENSUS (which will require thoughtful review of prior art and insightful comment, not argument) will lead to sanctions for disruption. I've avoided reporting you to the edit warring notice board as you appear to be a new user who is unfamiliar with the process. As this is a sometimes contentious article, and draws new users with strong opinions, the intention is to be civil and helpful. But you do need to do your part. Please read the linked policies and discussion threads provided. There is no WP:DEADLINE in Wikipedia, so there should be no rush for you to "hurry and get your edits inserted". Thank you, --4wajzkd02 (talk) 00:33, 3 December 2009 (UTC)[reply]

Not to belabor the point, but since, as the IP says, a quote is a quote, let me quote from the article, from the lede of the article to be exact. "Twelve regional privately-owned Federal Reserve Banks located in major cities throughout the nation". I've bolded the parts that are of interest here. Ravensfire (talk) 00:41, 3 December 2009 (UTC)[reply]

Oh good, so then you admit they are private. Werdtoyadonkay (talk) 01:33, 3 December 2009 (UTC)[reply]

Dear Werdtoyadonkay: Look, we've been through this a gazillion times on these talk pages over the years. Here is the original offending material this time:

However, in Lewis v. United States (1982) it was ruled that the Federal Reserve is privately owned. In particular, neither the Federal Reserve System nor its component banks are owned by the US Federal Government.

Obviously, the Court in Lewis never stated or ruled that the "Federal Reserve" is privately owned. Indeed, that would be nonsensical, since the Federal Reserve System includes both governmental and non-governmental components, as already noted in the article.

Re-read the quote from Lewis. The Court in Lewis was referring to a specific Federal Reserve Bank (I think it was the San Francisco bank). The term "Federal Reserve" means the Federal Reserve SYSTEM -- not an individual Federal Reserve Bank.

Also, the Court in Lewis did not rule that neither the Federal Reserve System nor its component banks are owned by the US Federal Government. Re-read the quote from Lewis.

The Federal Reserve Bank of San Francisco is a COMPONENT of the Federal Reserve System (it is nominally privately owned, but not privately owned in the sense that you can own and sell a share of stock in ExxonMobil or Microsoft). Wells Fargo Bank is a COMPONENT of the Federal Reserve System (and Wells Fargo is privately owned -- in the sense that owning a share of Wells Fargo is indeed like owning a share of ExxonMobil or Microsoft). The Board of Governors is a COMPONENT of the Federal Reserve System (it's a government entity). The Federal Open Market Committee (FOMC) is a COMPONENT of the Federal Reserve System (and the FOMC is another governmental entity). NONE OF THESE ENTITIES -- by themselves -- is "the Federal Reserve." Each is only PART of the Federal Reserve.

Similarly, "Baton Rouge" is not "Louisiana." Yes, Baton Rouge is located within Louisiana. It's a part of Louisiana. Baton Rouge is a CITY. That does not mean that "Louisiana" is a "city." The Federal Reserve Bank of San Francisco is not "the Federal Reserve." Yes, the Federal Reserve Bank of San Francisco is a PART of the Federal Reserve. The Federal Reserve Bank of San Francisco is a BANK. The "Federal Reserve" -- that is, the SYSTEM -- is not "a bank." It's a central banking SYSTEM, and it's composed of "privately owned" banks (like Wells Fargo) and quasi-privately owned banks (like the Federal Reserve Bank of San Francisco) and government entities (like the Board of Governors).

The statement that the "Federal Reserve" is "privately-owned" is meaningless gibberish. Famspear (talk) 02:31, 3 December 2009 (UTC)[reply]

If it's not private then why can't the government audit it? Seems pretty private to me. Common sense. 67.249.74.255 (talk) 15:06, 3 December 2009 (UTC)[reply]

Per WP:ASF, "Assert facts, including facts about opinions—but do not assert the opinions themselves". The facts, as documented in the aforementioned links, and as explained above, show that the "Federal Reserve System" is comprised of both private and non-private components. Your assertion that because "the government [can't] audit it" (an issue subject to current legislation), the entire "Federal Reserve System" is private, is an example of synthesis, the policy about which cautions "Do not combine material from multiple sources to reach or imply a conclusion not explicitly stated by any of the sources". I'm hopeful you understand the issue, now (that the System is comprised of both public and private parts), and that you'll not mistake "common sense" for verifiability in the future.

P.S. Read WP:INDENT, too. --4wajzkd02 (talk)

IP, it's actually false that the government can't audit the Federal Reserve System or the Federal Reserve Banks. From it's inception in 1913, there have been audits [1]. A bill passed in 1978 specifically allows the GAO to audit the Fed. [2]. The caveat to this (and this is where many anti-fed sites get the "never been audited") is there have always been exceptions to what can be audited (see my first link for a list of the current major exceptions). Since you're almost certainly aware of it, Ron Paul has been proposing for years a bill that would remove most of those exceptions. This year's version is the Federal Reserve Transparency Act - the article on the Act has some good details on it. A recent development is that Paul and Grayson got an amendment with similar provisions to the FRTA added to a major bill in the House. Nothing in the Senate yet though. Take a look through the FRTA article, and the two links - should give you some more info about the audits.

Oh, and the indenting that 4wajzkd02 is talking about really helps make the take page easier to read. It's a help to everyone if you wouldn't mind using indents! Ravensfire (talk) 18:35, 3 December 2009 (UTC)[reply]

Ok fine...they can't FULLY audit it. Werdtoyadonkay (talk) 18:46, 3 December 2009 (UTC)[reply]

Splitting Up The Article

I was going to add the {{Very Long}} tag to this article, but noticed the smaller tag already there suggesting that this article may be a good candidate for breaking up into multiple smaller articles. I personally would vote "yea" to doing this; as it stands, the article is simply too long with too much content in one space; one cannot easily get a "rundown" of what the fed is about without surfing through tons of detail you might notbe looking for or interested in. Spiral5800 (talk) 20:41, 13 December 2009 (UTC)[reply]

I've thought the same, and you can see that there are already several smaller articles (History, Criticism) already created. What other areas do you think would work to split off? Maybe a Detailed Structure, but I think the Monetary Policy and Budget are both best served as they are. The hardest part is that the Fed is a pretty broad topic, but most people, even when they mean a specific part, say "The Fed", so this article needs to stay fairly complete. Ravensfire (talk) 23:45, 15 December 2009 (UTC)[reply]

I think structure would be best to "split" and after that probably the history of it. It's definitely too long though and needs to be revamped.--Levineps (talk) 19:07, 10 January 2010 (UTC)[reply]

A hard trim to sections that already have sub-articles (history, criticisms) seems the best course. Everything there except for a brief summary should be moved to the sub-articles, and redundancies edited out. And then, maybe one or two more subarticles spun out leaving only brief summaries, I suggest splitting off 'structure' first and then maybe 'monetary policy'. LK (talk) 02:48, 13 January 2010 (UTC)[reply]

Specific criticism

My previous entry _was_ discussing a pretty specific issue. One look at the criticism section and it is obvious that the entire section is rather lacking. I just found three more unfounded statements that have absolutely no reference, no documentation, and no sources. In fact it might be said that the entire section isn't properly sourced. Hence my feeling that the entry was pretty ridiculous as it stands. Am I allowed to voice that opinion this time or should I expect summarily deletion again for daring to criticise the article? Re your explanation for deletion: "WP:SOAPBOX - please discuss specific changes," etc. Nunamiut (talk) 03:12, 16 December 2009 (UTC)[reply]

This contains constructive feedback, with specific concerns. Anyone who sees an opportunity to improve the article, while maintaining a neutral point of view is encouraged to do so. As your concerns emphasize, it's well-sourced facts the articles need. -- Scray (talk) 03:54, 16 December 2009 (UTC)[reply]

Easiest way to mark those is to add a {{fact}}tag to the statement. And that's just what you did - perfect and thanks. Ravensfire (talk) 12:21, 16 December 2009 (UTC)[reply]

The full Criticism article is in even worse shape, to be honest. Quite a few valid points there are raised without references. Ravensfire (talk) 16:08, 16 December 2009 (UTC)[reply]

I could now summarily delete Ravensfires comment as it has nothing to do with this article.Nunamiut (talk) 02:53, 17 December 2009 (UTC)[reply]

Or I could come up with some derogatory statement or snide remark to make it seem like this user is constantly breaching guidelines. That sometimes seems to be the accepted general practice around here when people are not accurate enough for the tastes of some, or if people just do not like that there is clear evidence of differing views on an issue and clearly has a desire to silence all evidence of alternate views. That is the kind of dishonest practice I have long since grown tired of. Nunamiut (talk) 02:59, 17 December 2009 (UTC)[reply]

Incorporation in the state of Delaware in 1914

Why does the article not state that the Federal Reserve Association is a private company that was incorporated in 1914 in the state of Delaware? https://delecorp.delaware.gov/tin/GINameSearch.jsp

— Preceding unsigned comment added by Sammy8912 (talk • contribs) 16:54, December 18, 2009 (UTC)

The FRA isn't connected to the Federal Reserve System in any way, so it shouldn't be in the article. Ravensfire (talk) 00:28, 19 December 2009 (UTC)[reply]

Really? where is the reference that proves no association? Sammy8912 (talk)

Really. A quick google search will pull up some info from a guy who paid for the extra info from Delaware. And since we're going for references, where the reference that proves association? And please, usual requirements for the reference (WP:V, WP:RS). Ravensfire (talk) 01:15, 19 December 2009 (UTC)[reply]

Is this what you are referring to? http://answers.yahoo.com/question/index?qid=20070724031652AAj9OAs. He states that the Delaware franchise tax status is VOID as of 2001. That does not mean that the Federal Reserve Association formed in 1914 has nothing to do with the Federal Reserve System. I tried to research proof of association but I cannot find anything. Maybe someone in the Wikipedia community has knowledge beyond Google that can contribute to this. The Federal Reserve Association was formed in 1914 a year after the Federal Reserve Act passed. The Federal Reserve is a quasi govt/private entity, so it is speculation that the Federal Reserve Association could be associated with the Federal Reserve in some form due to its name and formation date. The state of Delaware does not store the names of corporate directors in their database so there would be no way for us to verify who formed the company.

I opened this topic in the discussion page to bring it to the attention of the wikipedia community, because there may be a link, and someone here in the community may have knowledge to contribute.Sammy8912 (talk) 01:44, 19 December 2009 (UTC)[reply]

Wikipedia is an encyclopedia. Wikipedia does not include references in articles based on similarity of names. There is no evidence that the "Federal Reserve Association" has anything to do with the "Federal Reserve System", any more than the record company known as "I.R.S. Records" has anything to do with the "Internal Revenue Service."

Further, the "Federal Reserve Association" is not "associated" with the "Federal Reserve System," and there is no reliable source that states otherwise. Famspear (talk) 01:49, 19 December 2009 (UTC)[reply]

You keep stating that it is not associated with the Federal Reserve System. Where is your reference proving that it is not associated with the Federal Reserve System? Sammy8912 (talk) 01:55, 19 December 2009 (UTC)[reply]

No, as Wikipedia editors, we do not have to prove that "Federal Reserve Association" is not associated with "Federal Reserve System," any more than we have to prove that any other two organizations with similar names are not associated with each other. That's not how Wikipedia works.

If you as a Wikipedia editor have something from a reliable previously published third party source to the effect that there is some sort of association betweeen the two, then let's hear about it. Famspear (talk) 02:24, 19 December 2009 (UTC)[reply]

I'm going to need to see some reliable source that "Sammy8912" is not, in fact, associated with Sammy Davis Jr. or the Son of Sam, or Samuel Becket. Just trying to lighten the mood a bit. Cheers to all!Bkporter12 (talk) 19:19, 23 January 2010 (UTC)BKPorter12[reply]

Balance sheet and networth figures are internally prepared by the FED and are not audited

The figures stated in the balance sheet and networth section of the article are not audited figures. It should be stated in the article that the figures were internally prepared by the Federal Reserve, and that the figures were not audited by an independent accountability organization such as the GAO, so there is a possibility that they could be inaccurate http://www.politico.com/news/stories/0409/21427.html Sammy8912 (talk) 02:17, 19 December 2009 (UTC)[reply]

No, Wikipedia is not in the business of evaluating the reliability of audited -- or unaudited -- figures in financial statements that are mentioned in Wikipedia articles. However, if you have a previously published third party source that says the Federal Reserve System financial statements are (because of the lack of an audit) "possibly inaccurate," then that can be discussed here.

Sammy, as Wikipedia editors, we are not here to evaluate the Federal Reserve System ourselves. We are here to write a Wikipedia article based on what OTHER people (previously published, reliable third party sources) have written about the subject (in this case, the Federal Reserve System). Famspear (talk) 02:29, 19 December 2009 (UTC)[reply]

Fair enough. The article states that there is a possibility that the internally prepared figures could be inaccurate. Senator Ron Paul of Texas has proposed an amendment in the Financial Stability Improvement Act of 2009 to give the GAO the power to audit the Federal Reserve. This amendment was passed by the United States House of Representatives. http://www.ronpaul.com/on-the-issues/audit-the-federal-reserve-hr-1207/ , http://www.politico.com/news/stories/1109/29734.html. Sammy8912 (talk) 02:48, 19 December 2009 (UTC)[reply]

Actually, the Paul-Grayson (Paul and Alan Grayson both sponsored the amendment) was successfully added to the FSIA, which was then folded into a large bill and eventually passed. See the Federal Reserve Transparency Act article - details are there. Also, take a look at the Criticism of the Federal Reserve article (which is linked from this one at the Criticism section), it does include the audit criticism. Ravensfire (talk) 03:10, 19 December 2009 (UTC)[reply]

Ron Paul is not now nor has ever been a United States Senator, nor has he ever served in the Senate of any of the several states. Bkporter12 (talk) 19:26, 23 January 2010 (UTC)Bkporter12[reply]

This article has been bastardized by adding the below edits. Please fix and lock the article from further editing.

Destroying the nation's economy by influencing monetary and credit conditions in the economy in pursuit of maximum unemployment, high unstable prices, and short-term bubbles which burst if you blow on the them too hard. Supervising and regulating banking institutions to ensure the unsoundness of the nation's banking and financial system, and protect failing companies that should go bankrupt. Maintaining a failing financial system and taking away the risks that arise in financial markets that self-regulate greed and Malinvestment. Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including maintenance costs of Ben Bernanke's Helicopter.

Goganess 1-22-2010 Goganess (talk) 08:15, 23 January 2010 (UTC)[reply]