The Powerful Federal Reserve

Many know the Federal Reserve was created in 1913 in response to many bank failures and financial panics that plagued the United States from its birth in 1776. The original job of the Federal Reserve was to organize, stabilize, and standardize the monetary system and make sure all banks could honor withdrawals from its customers, while controlling inflation.  Forward, 97 years later and the Federal Reserve can do ever so much more!

Today with the help of 12 Regional Federal Reserve Banks, the Federal Reserve has the following duties:

• Maintain stable prices (control inflation)
• Ensure maximum employment and production output
• A financial institution regulator: establishes the rules of conduct, supervision & enforcement of the regulations.  Plus, monitors banks seeking to merge with other banks
• A bank’s bank: member banks can borrow money (short term funds) at a discounted rate
• The government bank: maintains the checking account of the U.S. Treasury.  Quite a number of transactions are done for the government, including tax deposits, securities such as savings bonds, treasury bills, notes, and bonds that are bought by and for the U.S. government-Issuance and redemption of U.S. savings bonds
• Coin and paper currency produced by the U.S. Treasury’s Bureau of Engraving and Printing is distributed by the Federal Reserve
• Monitors the condition of currency and either sends it back into circulation or has it destroyed
• Help “encourage” loans to low-moderate income neighborhoods instituted by the Community Reinvestment Act of 1977 and the 1992 Federal Housing Enterprises Financial Safety Soundness Act which “encouraged” requiring government sponsored credit agencies (Fannie Mae & Freddie Mac) to purchase more mortgages that banks issue to minority neighborhoods-Enforcement of consumer credit protection laws
• Provision of an efficient payment system-for example: check collections and electronic transactions
• Determination of margin requirements-the amount of credit granted investors for the purchase of securities, such as shares of stock
• Approval and supervision of the Edge Act and “agreement corporations”-involve corporations that are chartered to engage in international banking. The Fed is responsible for approving and regulating foreign branches of member banks and for the developing policies regarding foreign lending by member banks

It gets even better!  The Fed is not part of the federal government it is unto itself, independent-great right?  Not so fast!  Do you know that there are no outside “checks and balances” for the Federal Reserve?   It is said that each of the Federal Reserves tools are under the authority of a different group within the system-in short, each group is suppose to keep the other group in check.  How is that working so far America?  Not very well, right?

The Federal Reserve helped collapse the real estate market in this country, along with many banks. Why has Congress ignored this?  Could it be because of Barney Frank, Charlie Rangel, and Chris Dodd (to name a few)? In 97 years, the Federal Reserve has never, ever been audited! Why is this?  Could it be that there is a fear of what might be uncovered?  Some believe that the Federal Reserve is owned largely by foreign banks-could this be true?  Some say, the Federal Reserve is trying to collapse the United States from within for a country like China-could this be true? Others say, that the Federal Reserve is being used to help change the United States into a Socialist/Communist country-is this true?

I do not know exactly the answer to all the questions, but I do know the Federal Reserve has too much power that has gone unchecked way too long (97 years!) and it is time for America to demand that the Federal Reserve be audited by two different reputable accounting firms with no ties to the government or any congressman/woman.  This can be demanded by the people of this country and the Congress can do it right away-Congress has the ultimate power to audit and if needed amend the Federal Reserve Act of 1913 anytime.

References

Community reinvestment act. (2008, July 10). Retrieved on March 23, 2010 from http://www.federalreserve.gov/dcca/cra

Federal reserve districts and banks.  (2005, December 13). Retrieved on March 15, 2010 from http://www.federalreserve.gov/otherfrb.htm

Federal reserve. (n.d.).  Retrieved on March 18, 2010 from http://money.howstuffworks.com/fed.htm

Federal reserve system. (2008). The columbia ed. encyclopedia. Retrieved on March 23, 2010 from http://www.encyclopedia.com/topic/Federal_Reserve_System.aspx

Federal open market committee.  (2010, January 27). Retrieved on March 15, 2010 from http://www.federalreserve.gov/monetarypolicy/fomc.htm

Federal reserve system. (n.d.).  Retrieved on March 19, 2010, from http://www.answers.com/topic/fed-federal-reserve-system

Function of the fed. (n.d.).  Retrieved on March 15, 2010 from http://www.federalreserveeducation.org/fed101/structure/functions/functions/htm

History of the federal reserve. (n.d.).   Retrieved on March 15, 2010, from http://www.federalreserveeducation.org/fre_director/print.cfm?

Matthews, S., Zumbrun, J. (2010, March 19). Greenspan says fed, regulators ‘failed’ during crisis (update 2).  Retrieved on March 19, 2010 from http://www.bloomberg.com/apps/news?pid=20670001&sid-aCX7LScPOYWo

Schauf, T.D.  (1998, November 28).  Who actually owns the federal reserve central banks. Retrieved on March 23, 2010 from http://apfn.org/apfn/fed_reserve.htm

Structure. (2010). Retrieved on March 15, 2010 from

http://www.federalreserveeducation.org/fed101/Structure/

The structure of the federal reserve system.  (2010, January 27). Retrieved on March 15, 2010 from http://www.federalreserve.gov/pubs/frseries/frseri.htm

About the author

Becki Haight wrote 37 articles on this blog.

Educational background in business and management. Conservative, who believes the U.S. Constitution is not a “living document”, but firm in its resolve.Born into a middle class family and raised to believe in God, defending your country, helping your neighbor, working hard, and nobody owes you anything. Diagnosed with systemic scleroderma in 2008 and has proceeded to live and continually fight back! Loves to write about America and its great people.

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