Who owns stock in the federal reserve bank

In fact, the Reserve Banks are required by law to transfer net earnings to the U. Treasury, after providing for all necessary expenses of the Reserve Banks, legally required dividend payments, and maintaining a limited balance in a surplus fund. Federal Reserve Board issues interim final rule regarding dividend payments on Reserve Bank capital stock. What is the purpose of the Federal Reserve System? What does it mean that the Federal Reserve is "independent within the government"?

Does the Federal Reserve ever get audited? Is the Federal Reserve accountable to anyone? How is the Federal Reserve System structured? Search Submit Search Button. Toggle Dropdown Menu. Nationally, the Federal Reserve System is led by a Board of Governors whose seven members are appointed by the president and confirmed by the Senate.

The stockholders in the 12 regional Federal Reserve Banks are the privately owned banks that fall under the Federal Reserve System. These include all national banks chartered by the federal government and those state-chartered banks that wish to join and meet certain requirements.

The member banks must by law invest 3 percent of their capital as stock in the Reserve Banks, and they cannot sell or trade their stock or even use that stock as collateral to borrow money. Those decisions are made by the Federal Open Market Committee, which has a dozen voting members, only five of whom come from the banks.

And New York Fed shares cannot be traded, shorted, or pledged as collateral. The shares long paid a dividend of 6 percent. From Citibank and JPMorgan, there is a steep drop off in shareholdings. Bulge bracket rivals hold far fewer shares, with Morgan Stanley Bank owning 4. Deutsche Bank Trust Co. Americas was the owner of 1. There are scores of smaller owners, from Bank of Cattaraugus, which held shares, to Cayuga Lake National Bank, with Banks elect three class A directors to represent their own interests.

The same banks also elect three class B directors to represent the interests of the public. One mystery is why the New York Fed would not freely disclose stock ownership to begin with, given that the information can be estimated with some accuracy using public data from the Federal Deposit Insurance Corp. The peculiarity of these board elections may endow New York Fed stock ownership with more importance than is initially apparent, says economics professor Andrew Levin of Dartmouth College.

Group one banks vote for one particular designated class A director as well as one class B director. The group two and group three banks similarly vote for one class A and class B director each.

The bank, as a privately-owned institution, says on its website that it is not subject to FOIA requests like that made by Institutional Investor — although it says it will seek to comply with the spirit of the law, which it did in this case.