Federal Reserve System: 12 Regional Banks with 1 Central Power Base. The New York Fed. Over 70 Percent of Assets with New York Fed.
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The Federal Reserve Banks are broken up into 12 regional banks across the country by geographic location. Some excellent data has been provided from certain divisions including the St. Louis Federal Reserve Bank. Yet as we have found with the over 8,000 FDIC insured banks, the real power is held by roughly 100 banks. When we examine the actual assets the Fed currently holds, the only one powerful regional bank of all the 12 is the New York Fed.
The Federal Reserve Banks are divided up into 12 regional banks with 25 branches. These institutions supposedly monitor the economy and financial institutions which should make you question how this massive recession occurred. If there goal is to monitor then clearly someone dropped the ball. First, let us examine how the Fed is divided:
Now the above breakdown seems rather fair to the untrained eye. The Federal Reserve and the U.S. Treasury are designed to give this fair and balanced layout. Yet if we look at the assets held by individual regional Federal Reserve Banks we clearly see where the power is held:
Without question, it is clear that only one of the 12 Regional Banks actually holds the powerbase of the Federal Reserve System. In fact, all other 11 divisions can disappear and the Fed would still hold the vast majority of its current assets. The New York Fed virtually dominates the entire system.
Now why is this problematic? The issues of many of the other regional areas are largely lost in the pursuit to appease Wall Street. You need to remember that what is called “assets” on the Fed books is largely toxic asset swaps given to participating member banks. We really have no idea the quality of the assets on the books at the New York Fed because we have yet to audit the $2 trillion that the public is now fighting to reveal. The Fed is fighting back because it realizes that once the data is released, the public is going to have to contend with a major bait and switch. While the Fed is giving out high quality goods to banks the banks in turn are off loading toxic debt on the books of the Fed.
And the balance sheet is not as clear as it would appear:
$2.1 trillion is on the balance sheet at the Fed Banks and you would think that by looking at the above, things are pretty clear. They are not. Because in reality, the Fed can be giving out liquid clean paper in U.S. Treasuries while holding massive amounts of toxic mortgages at face value. When we look at some of the notes for above, you can understand why an audit is vital:
“1. Includes securities lent to dealers under the overnight and term securities lending facilities; refer to table 1A.
2. Face value of the securities.
3. Compensation that adjusts for the effect of inflation on the original face value of inflation-indexed securities.
4. Guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. Current face value of the securities, which is the remaining principal balance of the underlying mortgages.
5. Cash value of agreements.”
Face value. We should all know by now that anything with “face value” and the current housing market should be taken with a grain of salt. Now why is the New York Fed the biggest of the entire bunch? Just ask yourself which central Regional Bank of the Fed is closest to Wall Street and all the investment banks that converted Wall Street into a casino. When you break the assets out, this is why Wall Street is rallying while Main Street is dealing with over 26 million unemployed and underemployed Americans. According to Wall Street and the 1 mega powerful New York Fed, everything is looking dandy now.
We may have too big to fail with the large banks but what about too big of a central bank? I am certain that many of the regional Fed divisions would have something to say about best protecting their own regional interests. Why is one region that much more dominant than others? If you look at the U.S. Treasury it looks like Wall Street is a revolving door for a certain crew. Timothy Geithner was former president of the New York Fed and Henry Paulson was a former CEO of Goldman Sachs. They know banking (the east coast variety).
So while things may appear to look better for Wall Street, average Americans are seeing the middle class dream evaporate. The Fed is merely serving its banking masters. When push comes to shove, if you look at the details of the Fed and their actions their main mission is to protect the banking sector, not the American public. That is the unsettling myth floating around. I think many Americans are now waking up to this with the majority of Americans favoring an audit of the Fed. Since the Fed is risking the value of the U.S. dollar and is using tax money to back the system, the public does have a right to know what is being put up as collateral. There is a false dichotomy that if we didn’t give the Fed and Wall Street everything it asked for then we would be worse off. This is simply not true. We had multiple roads to follow at the heart of the crisis. The Fed chose to protect the banks and throw the average American under the bus with the U.S. dollar. It also decided to ignore the trillions in toxic debt, much of it still sitting on the balance sheet of banks.
What we realize with the New York Fed is during economic panic, power starts to concentrate in fewer and fewer hands. This occurred during the Great Depression. This time it is a wealth transfer from the middle class to the banking elite. The U.S. Treasury and Federal Reserve are designed to protect the banking and financial sectors of the economy. To think otherwise is to ignore the facts.