Nationalize the Federal Reserve for Greater Transparency and Accountability

Federal Reserve Building

Target: Senate Majority and Minority Leaders Harry Reid and Mitch McConnell, House Majority and Minority Leaders John Boehner and Nancy Pelosi

Goal: Pass legislation that would make the Federal Reserve a division of the U.S. Treasury, its members public officials not elected by private banks, and all of its activities regularly disclosed to Congress.

The Federal Reserve System, commonly known as the Federal Reserve or the Fed, was established in 1913 with the Federal Reserve Act. It acts as the US central bank and is responsible for setting monetary policy, supervising and regulating banks, keeping the financial system stable, and providing certain financial services. While its Board of Governors is appointed by the President of the US and approved by the Senate, many members, such as 6 of the 9 directors of each of the 12 regional Reserve Banks, are chosen by private banks. In plain English, many influential members of the US’s central bank are chosen by private banks. It is difficult to overstate the importance of this institution, since money plays such an essential role in the world.

As mentioned above, one job of the Fed is to supervise and regulate banks. However, with such a large number of decision makers at the Fed coming from the industry they are supposed to regulate, a clear conflict of interest exists. Fed members from the industry have an incentive to act in ways that benefit the industry and/or the particular banks from which they came. For instance, during the financial crisis that began in 2008, while Jamie Dimon was both CEO of JPMorgan Chase and a member of the Board of Directors of the Federal Reserve Bank of New York, JPMorgan Chase received $390 billion in assistance from the Fed. This is the same man and same bank that recently announced $2 billion in losses in derivatives trades that were supposed to help the bank manage risk.

The Fed also acts under a large degree of secrecy. Many key details surrounding its loaning programs and its balance sheet have been hidden, even from Congress, with the exception of one audit ordered by the Dodd-Frank Wall Street Reform legislation. When the Inspector General of the Fed testified before the Congressional Financial Services Subcommittee, she was unable to answer basic questions about Fed activities and seemed to indicate that no one at the Fed regularly tracked their loan programs as a whole.

Given the critical roles the Fed plays in our economy and financial system, it is imperative that this organization be publicly managed, accountable, and transparent. By signing this petition, you will be pushing Congress to make these vital changes.

PETITION LETTER:

Dear Senate Majority Leader Reid, Senate Minority Leader McConnell, House Majority Leader Boehner, and House Minority Leader Pelosi,

The Federal Reserve acts as the central bank of the United States, yet it lacks adequate transparency and integrity. Many members of the institution are chosen by private banks, the very companies they are supposed to regulate.

An audit of the Federal Reserve revealed specific conflicts of interest among its members. Jamie Dimon, for example, was both CEO of JPMorgan Chase and a member of the Board of Directors of the Federal Reserve Bank of New York when JPMorgan Chase received $390 billion in assistance from the Fed. Furthermore, it took significant Congressional action just to reveal such specifics.

Given the incredibly important role played by the Federal Reserve, it must be made a division of the US Treasury, its members made public officials not elected by private banks, and all of its activities regularly disclosed to Congress.

I urge you to draft and pass legislation that would accomplish these goals, and to encourage your party members to support such efforts.

Sincerely,

[Your Name Here]

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One Comment

  1. Adrien Aaron Adrien Aaron says:

    In this piece I wasn’t able to cover the Fed’s ability to create money, but that’s another crucial reason it needs to be under public control and scrutiny.

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43 Signatures

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