Putting "Federal" Back in the Federal Reserve
From Web of Debt, "Putting the Federal Back in Federal Reserve":
The Federal Reserve Act of 1913 was a major coup for the international bankers. They had battled for more than a century to establish a private central bank in the United States with the exclusive right to “monetize” the government’s debt; that is, to print their own money and exchange it for government securities or I.O.U.s. The Federal Reserve Act authorized a private central bank to create money out of nothing, lend it to the government at interest, and control the national money supply, expanding or contracting it at will. Representative Charles Lindbergh Sr. called the Act “the worst legislative crime of the ages.” He warned prophetically:
“[The Federal Reserve Board] can cause the pendulum of a rising and falling market to swing gently back and forth by slight changes in the discount rate, or cause violent fluctuations by greater rate variation, and in either case it will possess inside information as to financial conditions and advance knowledge of the coming change, either up or down.
“This is the strangest, most dangerous advantage ever placed in the hands of a special privilege class by any Government that ever existed. . . . The financial system has been turned over to . . . a purely profiteering group. The system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people’s money.
In 1934, in the throes of the Great Depression, Representative Louis McFadden would go further, stating on the Congressional record:
“Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders. In that dark crew of financial pirates there are those who would cut a man’s throat to get a dollar out of his pocket; there are those who send money into states to buy votes to control our legislatures; there are those who maintain International propaganda for the purpose of deceiving us into granting of new concessions which will permit them to cover up their past misdeeds and set again in motion their gigantic train of crime.
“These twelve private credit monopolies were deceitfully and disloyally foisted upon this Country by the bankers who came here from Europe and repaid us our hospitality by undermining our American institutions.”
As for Fannie Mae – the Federal National Mortgage Association – it actually began under Roosevelt’s New Deal as a government agency. But like the Federal Reserve, Fannie Mae is now “federal” only in name. In 1968, it was re-chartered by Congress as a shareholder-owned company, funded solely with private capital. If it were a bank, today it would be the third largest bank in the world; and it makes enormous amounts of money in the real estate market for its private owners. In 1970, Freddie Mac (the Federal Home Mortgage Corporation) was created to provide competition and end Fannie Mae’s monopoly in the secondary mortgage market. But Freddie Mac too is a wholly shareholder-owned, publicly-traded corporation.
Under a 1992 law, if either of these two mortgage giants is seen to be severely undercapitalized, it may be placed into government conservatorship. But the plan now being pursued is to bail out these private corporations by increasing their capital base with taxpayer money and their profit margins with greater access to Federal Reserve loans. The result will be to privatize profits to their management and shareholders while socializing risk to the taxpayers. We the people will foot the bill. If the people are going to bear the risk, we should reap the benefits. Either these two mega-corporations should take their licks in the market like any other private corporation, or they should be nationalized, delivering not just their debts but their assets to the taxpayers.
