Banks Squirm as Congress Moves to Cut the 6% Dividend Paid to Them by the Federal Reserve

Screen Shot 2015-03-03 at 9.59.11 AM

On December 23 of this year, the Federal Reserve will be 99 years old.  And throughout that 99 years, regardless of boom, bust, recession or Great Depression, the biggest Wall Street banks have been enjoying a 6 percent, risk-free return on the capital they hold at the Fed in the form of dividends.

Have you looked at your checking or money market bank statement lately from JPMorgan Chase or Citibank? How about the statement showing the interest you’re earning on your mortgage escrow account with the big banks? While the country suffers through the lingering effects of the Great Recession caused by the biggest Wall Street banks, the public typically receives less than 1 percent on their deposits at the big banks, while the government has legislated a permanent, risk-free 6 percent guarantee to the Wall Street banks for their capital on deposit at the Fed.  Now that’s an entitlement program that needs to die!

This corporate welfare program gets even better: if the shares of stock were acquired prior to March 28, 1942, the 6 percent risk-free dividend is tax exempt and the bank doesn’t have to pay corporate taxes on it.

– From the excellent 2012 Wall Street on Parade article: Kill This Entitlement Program: The 6% Risk-Free Dividend the Fed Has Been Paying Wall Street Banks For Almost a Century

Did you know that the Federal Reserve pays an annual 6% dividend to its shareholders, i.e., the member banks of the cartel? Must be nice, considering savers who had nothing to do with cratering the world economy, and failed to receive a taxpayer funded bailout, can barely earn 0.5% on their money. It’s also quite bizarre. How many other “public institutions” have private shareholders to whom they pay 6% risk free dividends?

None, which once again highlights the point that the Federal Reserve is NOT a public institution working on behalf of the citizenry, but is rather a banking cartel designed to enriched and protect its member banks (as we saw on clear display in 2008).

It appears that some members of Congress are now targeting the estimated $17 billion over ten years paid out by the Fed to its member banks via the highway-funding bill. The Hill reports that:

The banking industry is scrambling to kill a provision in the Senate highway-funding bill that would reap billions of dollars in revenue by cutting a century-old system that has reaped annual awards for banks.

Industry lobbyists say they were blindsided by the inclusion of the provision, which would help policymakers cover the bill’s cost by cutting the regular dividend the Federal Reserve pays to its member banks.

One lobbyist went so far as to reread the Federal Reserve Act of 1913 after getting wind of the proposal to determine what was at stake.

In a Congress where lawmakers are always hunting for politically palatable ways to raise revenue or cut costs to cover the expenses of additional legislation, the Fed provision was a novel, and rich, one. The proposal is estimated to raise $17 billion over the next decade, and is by far the richest “pay for” included in the bill.

Lobbyists said they were not aware of any previous time when lawmakers had attached the language to a piece of legislation, which would scrap a perk banks have come to expect for over a century.

When banks join the Federal Reserve system, they are required to buy stock in the central bank equal to 6 percent of their assets. However, that stock does not gain value and cannot be traded or sold, so to entice banks to participate, the Fed pays out a 6 percent dividend payment.

The Senate proposal says it would slash that “overly generous” payout to 1.5 percent for all banks with more than $1 billion in assets. While the summary language outlining the proposal said that change would only impact “large banks,” industry advocates argued that banks most would identify as small community shops could easily have assets in excess of that amount.

While I’m not convinced that this proposal will actually go through, I applaud the members of Congress who included it nonetheless. At a minimum, it will expose more people to how the banking system actually works, and get this 6% dividend in the public consciousness.

After all, #banklivesmatter

For related articles, see:

The Federal Reserve Refuses to Provide Names Requested by Congress in Probe

113 Federal Reserve Staff Members Make $250,000 Annually

Will Senators Rand Paul and Elizabeth Warren Unite to Finally “Audit the Fed”?

Video of the Day – “End the Fed” Rallies are Exploding Throughout Germany

In Liberty,
Michael Krieger

Like this post?
Donate bitcoins: 35DBUbbAQHTqbDaAc5mAaN6BqwA2AxuE7G


Follow me on Twitter.

5 thoughts on “Banks Squirm as Congress Moves to Cut the 6% Dividend Paid to Them by the Federal Reserve”

  1. “WICKED DEBT FRAUD” (REVISED) The one and ONLY answer to the debt problem is to declare it null and void because of FRAUD! It is fraud because it is mathematically impossible to repay! It cannot be repaid because the interest is never created on the loan and that is fraud and fraud voids all! If we don’t void all out of thin air debt, the bankers will own almost EVERYTHING! We will be homeless slaves! They have a license to counterfeit! Can I counterfeit the money to repay the loan? Why not? They counterfeited it to lend it to me? If we even attempt to repay an impossible debt (All out of thin air debt) all we do is show our ignorance! The way to fix this mess is so simple a 3rd grader can figure it out! We void the fraudulent debt and everyone keeps ALL the items they have so called debt on! Then we can start to use a debt free currency and / or gold and silver! Then we will have a robust economy like never before — OR WE LET THE BANKERS STEAL EVERYTHING!
    I was in about the third grade when the news was talking about the national debt and I asked my dad “who do we owe money to? And who could possibly be richer than the United States? And where did they get the money?” And then my dad took a gulp off his beer and said “we owe it to ourselves!” I said “that’s the dumbest thing I’ve ever heard of!” That’s like me borrowing from my right pocket and setting fire to the interest and putting the rest in my left pocket! This was about 1972! But Dad was wrong! We owe it to international Bankers running the biggest Ponzi scheme on earth called The Federal Reserve System! And yes it really is this simple! The bankers have a shoe-in on ALL loans they make! All they have to do is stop lending and then start foreclosing on ALL debts! -meaning they now own everything that has a debt by having a license to counterfeit! So we #1 keep getting fleeced by continuing to pay this fraudulent scheme! OR #2 We declare ALL out of thin air debt NULL AND VOID because of FRAUD! And we keep everything we have so called debt on! MOST people don’t get this part! Every car, boat, house, machine, tool, farm,etc. has already been paid for by the fraudulent paper! So no one loses! (except the fraudsters) WE sure as hell can’t give it to the banksters! (let them steal it) AND IT DOESENT MATTER IF THE BANKERS FORGAVE THE DEBT BY 99% ITS STILL UNPAYABLE! (BECAUSE THE INTREST DOES NOT EXIST ) So when we void the FRAUD This will be the ultimate FRESH start for everyone! Share this if you want THE solution to the WORLD’S problems! If not, everything will continue to get worse until we have HONEST DEBT FREE MONEY and / or GOLD AND SILVER! And there is plenty of gold and silver! Just Divide the paper money (FRN) by the gold /silver and you have the value of them! NO MATTER WHAT IT COMES TO per OZ! Then we would be happy to work for SAY A ONE OZ. SILVER COIN A day ! Because a one OZ. silver coin (REAL MONEY) will buy what $100 – $200 or more did before the reset! THINK ABOUT IT! This is what Scripture calls the jubilee! “WICKED” Debt And the amount and size of the debt has nothing to do with it being mathematically impossible to pay! This fraud is so “WICKED” that even a $10 loan is a Ponzi scheme here’s how it works! I’m the new banks first customer, I borrow $10 @ 1% interest I now owe the bank $10.10 but ALL the money in the world is $10 the .10 cents doesn’t exist (BECAUSE THE INTREST IS NOT CREATED) so some one else has to borrow some so called money and I have to find a way to get .10 cents from them so I can repay my loan! Now say they borrowed $10 also now I somehow get .10 cents from them to pay my loan back! But now he is short .20 cents to pay his loan! Now you can see how a $100,000 house that will cost you $265,000 to pay off because you have to pay $165,000 in interest (THAT DOES NOT EXIST) is a GIGANTIC PONZI SCHEME! Now multiply that by millions of people in the U.S. and you can see how It turned into the monster debt we see today! And for the loans that do get repaid multiple people have to default on there loans for you to pay off your loan! NOW you can understand why we have a rapidly growing homeless problem! Now that is a WICKED debt money system that we must declare Void!

    Reply
  2. The article says that the cost of the dividend is an “estimated $17 billion per year paid out by the Fed to its member banks,” but the cited source says “the proposal is estimated to raise $17 billion over the next decade.”

    Two questions arise. First, is it $17 billion per year or $17 billion per decade? Second, if the amount to be raised is $17 billion, then the whole dividend would have to be about $22.7 billion, as the proposal is to reduce the dividend from 6% to 1.5%. Hence the proposal would take back 3/4 of $22.7 billion or $17 billion (over a decade).

    It’s an interesting article and a good move on the part of congress, but accuracy still matters.

    Reply

Leave a Reply