The member banks of the federal reserve sell shares to private banks?
Answer:
Individual commercial banks that are members of the Federal Reserve System must buy Federal Reserve stock.
Yes. The member banks of the Federal Reserve each have a "paid up capital" which is also called the stock of the regional Federal Reserve Bank to which they belong. The Federal Reserve Banks in turn are a part of the Federal Reserve System. Member banks own shares in their local Federal Reserve Bank, and not the Federal Reserve System
There are several big differences between this type of stock and a typical Wall St. stock.
1. The bank can't sell its stock. It has to keep the capital on deposit with its local Fed bank as a part of its required reserves.
2. There is no possible capital gain since the value of the stock doesn't change.
3. The shares receive a 6% dividend as provided by the Federal Reserve Act.
4. Most stocks have a one share one vote governance mechanic. At the Fed it's one vote per one member bank even though large banks have a lot more tied upo in Fed shares than small ones.
5. Member banks do not elect all the directors of their local Fed bank, only some.
Edit to respond to comment:
Regardless of whetehr you think it's "made up crap" it's also the law. LOL! Read the Federal Reserve Act of 1913 and interpret it for yourself.
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