Monday, March 31, 2008

Federal Reserve scam, or why the Federal Reserve system is not a good idea but a formal central bank is

Because although the Board of Governors is appointed by Congress and the Executive the twelve regional banks that implement the decisions are largely overseen by private bankers and CEOs, although civil servants do the day to day running of the banks.

There are nine members each of the regional boards of directors. The overwhelming majority of them are either CEOs of either large corporations or banks themselves. The rest are taken up by a few academics and, in a stunning display of egalitarianism, four union members--one whom was appointed deputy chair to the New York branch. Only three of the nine are appointed by the federal government itself, and these are invariably the three that have a possibility of being neither bankers nor CEOs, although some CEOs selected are from nominally independent companies like very large hospital companies. Three of the members are elected by the banks themselves that the Fed oversees to represent the public, and they're almost invariably CEOs, and the final three are elected again by the banks themselves to represent the banks. These, of course, are bankers.

So in a public institution you have the banks that are supposed to be overseen by the federal reserve selecting 6 out of 9 of the members of their individual boards of directors. The only thing giving it a patina of representativeness is that the chair and deputy chairman of the boards have to be selected out of the three that the government selected. But this doesn't always mean that the chairman will be a disinterested third party because the Board of Governors does sometimes select bankers as one or more of their three choice, with several districts having no non-CEO non-bankers appointed by the board of governors at all.

Let's look at a list of the people selected by the banks themselves to represent the public:

San Francisco:


Vice President and
Stahlbush Island Farms, Inc.
Corvallis, Oregon


Nordstrom, Inc.
Seattle, Washington


President and
Chief Executive Officer
CityLink Investment Corporation
San Diego, California


James B. Bexley
Professor, Finance
Sam Houston State University
Huntsville, Texas

Robert A. Estrada
Estrada Hinojosa & Company, Inc.
Dallas, Texas

Margaret H. Jordan
President and CEO
Dallas Medical Resource
Dallas, Texas

The Kansas website doesn't indicate which directors were selected to represent the public.


William J. Shorma

Yankton, South Dakota

Todd L. Johnson

Chairman and Chief Executive Officer
Reuben Johnson & Son, Inc. & Affiliated Companies
Superior, Wisconsin

Randy Peterson

Facility Director
Lake Superior State University
Sault Ste. Marie, Michigan

St. Louis website doesn't indicate who the members selected to represent the public are

Unfortunately, the Chicago website doesn't indicate the members selected to represent the public

Neither does the Atlanta branch website

Nor the Richmond branch website


Ann Hailey

Retired Executive Vice President, Corporate Development
Limited Brands
Columbus, OH

Les C. Vinney

Senior Advisor and Immediate Past President and CEO
STERIS Corporation
Mentor, OH

Third seat vacant

No info from Philadelphia branch about who their public representatives are

New York:

Richard S. Fuld, Jr.
Chairman and Chief Executive Officer
Lehman Brothers Holdings Inc.

Jeffrey R. Immelt
Chairman and Chief Executive Officer
General Electric Company

Indra K. Nooyi
Chairman and Chief Executive Officer
PepsiCo, Inc.


Robert K. Kraft
Chairman and Chief Executive Officer
The Kraft Group

Stuart H. Reese
Chairman, President and Chief Executive Officer
MassMutual Life Insurance Company

Michael T. Wedge
President, Chief Executive Officer, and Director (former)
BJ's Wholesale Club, Inc.

All the directors of all of the branches are listed, but because the banks can select anyone to be a representative and the Board of Governors can decide on anyone to be a representative, including bankers (just not people actively managing banks), the fact that they haven't included a label of "Class B" (the representatives' class) next to their names means it's impossible to tell who exactly the representatives are.

Hats off to the Minneapolis branch though for being the most progressive of all of them, with not only a union member selected by the Board of Governors but a guy in charge of facilities at a state college also serving as a board member.

If you look through it all the directors you see banker banker banker, CEO CEO CEO, banker banker banker, CEO CEO CEO, college professor, banker banker baker.

I for one am glad that the CEO of Nordstrom's is acting as one of my public representatives here in the Northwest, although to be fair we do have an organic food company CEO and a builder of public housing developments as the other two reps.

Talk about a conflict of interests to end all conflicts of interests, these are the people responsible in large part for directing the central banking system of the United States, which in turn implements monetary policy for the entire country.

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