Obama finance “reform” plan would give more authority
What is the most powerful business corporation in the US?
At one time some might have said General Motors. That was when GM was the #1 automaker on the planet and “what was good for GM was good for America” was the mantra on Capital Hill.
Many would nominate today Wall-Mart (#1 in revenue), Exxon-Mobil (#1 in profits), Citibank (the nation’s biggest bank), General Electric (arguably the most diversified) Microsoft (the computer giant), Google (information gatekeeper), or AT&T (communications behemoth). A fine case can be made for each of these not only being economically dominant but politically influential in shaping public policy effecting our lives, communities and the natural world.
None of the nominees come remotely close to the power and influence of one business corporation few even consider to be a business corporation: the Federal Reserve – a privately-owned and mostly independent financial institution.
The Federal Reserve System is grossly misnamed. It’s hardly federal at all (if federal is implied to be “public”) but, rather, established under the 1913 Federal Reserve Act as a private corporation composed of 12 regional Federal Reserve banks with the all-mighty power and authority to coin and issue our nation’s money and to regulate the volume of money through interest rates. It has, thus, the role of the nation’s central bank, yet it’s beholden largely to its major stockholders – private banks who hold all the stock in the regional banks in proportion to their size. The federal government cannot own stock, nor can the public. The largest stockholders in the Federal Reserve corporation are the nation’s biggest banks – JP Morgan Chase, Citibank, Bank of America, etc.
The President, Congress and the courts have little control over the Federal Reserve bank or their policies. The major exception is Presidential appointment and Senate confirmation of the seven Board of Governors – currently headed by Ben Bernanke. Once appointed for 14-year terms, Board Members function mostly independent from public control. Annual reports to Congress and twice-a-year appearances of the Fed Chair are about the only opportunities to learn what the Fed is up to (all the most urgent since the Fed’s books haven’t been audited).
Meanwhile each of the 12 regional banks have their own boards. They are all composed of member banks.
The corporate underpinning of the Fed was clarified and reinforced by a 1982 case, Lewis v. United States which declared the Federal Reserve Banks are "independent, privately owned and locally controlled corporations", and there is not sufficient "federal government control over 'detailed physical performance' and 'day to day operation'" of the Federal Reserve Bank for it to be considered a federal agency.
Highlights of the case are at
The Fed creates our nation’s money. Actually, they buy the pieces of paper, called Federal Reserve Notes, which are printed by the US government for pennies on the dollar. Quite a profitable scheme. They use these Federal Reserve Notes then to buy US government bonds.
Why doesn’t the US government itself print US government money rather than selling government IOUs for Federal Reserve Notes that must be paid back with interest (which constitutes our national debt)? Fabulous question. It’s a democratic question that needs to be asked to every federal public official and brought up before the media and before groups we are a part of. Why? Because government debt is crippling the nation and preventing us from meeting our real needs and acting independently.
Obama plan shifts oversight duties
All this is background to the proposal this week by the Obama administration to “reform” the nation’s financial institutions. Some of the proposals changes are good, specifically the creation of a new agency to protect consumers by taking over the oversight of mortgages and prohibiting the Federal Reserve bank from use emergency powers to bail out failing banks
On the other hand, the proposal would give the Fed sweeping new powers to oversee the securities and insurance businesses and all other firms whose failure could threaten the economy. . These regulatory powers, as proposed, could duplicate and even overrule other regulators.
Giving a private financial corporate the power and authority to be master regulator of financial corporations is profoundly anti-democratic.
Congress will be debating this proposal over the weeks and months ahead.
Here’s 4 actions to take:
1. Learn more about the Federal Reserve. There are many excellent materials (books, articles, etc.) which expose this mighty corporation.
2. Tell your US Senators and Representatives to oppose any financial “reforms” that give the Federal Reserve any new power.
3. While you’re at it, ask your federal elected representatives to support HR 1486 calling for an independent audit of the Federal Reserve.
4. Ask your federal elected representatives to introduce legislation calling for the democratization of our currency. The creation of money is too important of a national function to be farmed out to a private corporation – as well as to banks. It’s time for money creation to be a public responsibility.
As Thomas Jefferson declared, "If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."