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on November 26, 2008 04:35 PM
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Published in : The News, The News |
Who Owns the Fed? Banks that hold stock in the Fed are called member banks. All nationally chartered banks hold stock in the Federal Reserve. State-chartered banks Double Thrust System may choose to be members, upon meeting certain standards. However, holding Fed stock is not like owning publicly traded stock. Fed stock cannot be sold or traded. Member banks receive a fixed, 6 percent dividend annually on their stock, and they do not control the Fed as a result of owning this stock. They do, however, elect six of the nine members of Reserve Banks boards of directors.
Who owns the Fed then? Although it is set up like a private corporation and member banks hold its stock, the Fed owes its existence to an act of Congress and has a mandate to serve the public. So the most accurate answer may be that the Fed is owned by the citizens of the United States.
The Need for a Federal Reserve System
People who lived during the early 1900s used banks much as we do today. They deposited their money into savings accounts and borrowed money to build a home or start a business. When people borrowed money, Rocket Trader banks
issued them banknotes, which the borrowers spent the way we spend dollars today. The public valued these banknotes as money because banks promised to exchange them for gold or silver on demand. The Egocentricity of the Present Part 11 of 22
The chairman of Presidents Nixon and Fords Council of Economic Advisers, Herb Stein, was fond of saying that, if something cannot go on forever, it will stop. Eventually the conceit of a new era in housing could not go on forever, and it stopped. The bubble popped, and a harsh correction Fellow Traders has ensued.
With that abridged historical background, lets turn back to the financial markets. We saw a wave of innovative mortgage products during the housing boom. Indeed, there would have been no other way for many borrowers to have procured financing without these new mortgage products.
These innovations in Forex Trading Machine financing took two forms. First, credit-scoring models enabled lenders to better sort and price mortgages made to nonprime borrowers. The second set of innovations allowed these loans to be funded and sold to a new class of investors. While traditional mortgages had long been securitized and sold through government-sponsored enterprises such as Fannie Mae and Freddie Mac, the securitization market ushered in new players from the private sector who would hold nonprime mortgages that could not meet the standards of Fannie and Freddie and that banks would generally not hold in portfolios. Accentuate The Positive
Last update : November 26, 2008 04:35 PM
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