We are writing in response to an article written by Mr. Bruce Anderson appearing in the Readers' Forum of Nov. 3. Your readers may be misled by some of the inaccurate statements directed against the Federal Reserve System.
The Federal Reserve is neither a privately owned central bank nor owned by foreign interests. Created by Congress in the Federal Reserve Act of 1913, the Fed is an independent agency within government, subservient to the people through their elected representatives in Washington, D.C. Foreign chartered banks, foreign investment banks or individuals by law cannot have membership in the Federal Reserve nor do they have any control whatsoever over the policies and functions of the Fed.As mandated by Congress, the Fed's main tasks are to keep the nation's financial system healthy, its economy growing and prices stable. The Federal Reserve System directly controls only one interest rate, the discount rate. That is the rate charged financial institutions for borrowing at the Fed's credit window.
Contrary to Mr. Anderson's assertion, the Federal Reserve System and its 12 Reserve Banks are indeed audited. The 95th Congress enacted Public Law 95-320, authorizing the comptroller general of the United States to audit the Federal Reserve System. Pursuant to that statute, the General Accounting Office has conducted numerous financial and operational audits of Federal Reserve activities but not of monetary policy.
In exercising supervision of the reserve banks, the board of governors requires these banks to have independent audits and to report their condition to the board. Board auditors also examine individual reserve banks. In addition to internally conducted audits, the system is subject to financial audit by a nationally recognized independent audit firm.
Paul Morley
Coordinator, public information
Federal Reserve, Salt Lake City