“The banks have shown that they can’t be trusted with the American economy. That’s generally been the case, but now it’s out in the open 350 billion dollars later.”

Recalling my previous post, “Chase gets 18 months to comply with new (Reg. Z) rules – But, customers should only need 15 days to comply with Chase’s new rules,” one should note that the ownership and control of the Federal Reserve is rife with inherent conflicts of interest (which have been controversial since its inception).  For example, as indicated in the Federal Reserve publication entitled, “The Federal Reserve System: Purposes and Functions“:

“The Board and the Reserve Banks share responsibility for supervising and regulating certain financial institutions and activities, for providing banking services to depository institutions and the federal government, and for ensuring that consumers receive adequate information and fair treatment in their business with the banking system.” (pg. 3)

Which “certain financial institutions” does the FED regulate?  Why it’s member banks.  That is, “national banks; by law, they are members of the Federal Reserve System.” (ibid, pg. 12).  Chase Bank, N.A., is a member, for instance.

Here’s where it gets interesting (and an inherent conflict of interest arises): ownership of stock.  How much stock, you ask?  “Member banks must subscribe to stock in their regional Federal Reserve Bank in an amount equal to 6 percent of their capital and surplus, half of which must be paid in while the other half is subject to call by the Board of Governors.” (ibid).

Putting it altogether, the FED is charged with “ensuring that consumers receive adequate information and fair treatment” from Chase (along with other member banks), which as one of the largest banks, is a major stockholder in the organization that regulates Chase.  Sweet, isn’t it?  Now do you see the conflict of interest?  No wonder Chase had its wishes for 18 months granted.  Big “compromise,” wasn’t it, that under the new FED Regulation Z rules, that banks will have to give 45 days notice before imposing changes?

In a statement before the U.S. House of Representatives in January 2009, Representative Dennis Kucinich criticized the FED system stating:

“The banks have shown that they can’t be trusted with the American economy.  That’s generally been the case, but now it’s out in the open 350 billion dollars later.  In 1913, the money power of the country was taken away from the people — by constitutional privilege it belongs with the Congress — but it was given up, in a Federal Reserve Act.  The Federal Reserve is no more ‘Federal’ than Federal Express!  But, yet it has the power to determine the direction of use of money in our economy.  If we could take that power back and put the Federal Reserve under Treasury, we start to be in a position, of being able to control monetary policy on behalf of the United States’ people.”