French Banks Can Set Off Contagion That Will Make Central Bankers Long For The Good 'Ole Lehman Collapse Days!

Reggie Middleton's picture

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swamp's picture

Why not an article on the fraudulent IRS and how "income tax" is illegal and how income tax goes to the private bankers of the private Federal REserve and that the IRS was set up at public expense to collect the interest on the debt to pay the bankers. All illegal. All of it, including the IRS which are the henchmen of the Federal Reserve and who collect alleged debts without due process as they bypass all court systems. Per our Founding Fathers the Federal Government is not even entitled to know how much money we earn.

Republicae's picture

Once again, incorrect, while the 12 Regional Federal Reserve Banks are indeed quasi-private, meaning large commercial banks, S&Ls, nationally chartered banks (banks which all are required by Congressional law to be members and own stock in the Federal Reserve Bank) and some state chartered banks are given the option to become members and own stock in them, private individuals cannot own stock and the Federal Reserve Central Banking system itself is a government agency, with government appointees, government payroll and government benefits. The Board of Governors are  all government appointees. The vast majority of proceeds from the sale and interest on government bonds are relinquished by the Federal Reserve and reverts to the Treasury.

It is important to understand the workings of the so-called private portion of the FED, they too were established by the Federal Reserve Act and are under the oversight of Congress, their actions are not independent from that oversight, but their actions are not directly accountable either due to the nature of the Federal Reserve Act itself. Now, as far as just how the corporate structure of the 12 Regional Federal Reserve Banks operates, they are similar to a private corporation in that their organization is based on such a structure and stock in them is held by private commercial banks however, that is where the similarity ends. All Federal Reserve Stock, that is stock issued from the 12 Regional FEDs can never be sold by the member banks, it can’t be traded, the dividends are static at 6% annum, they can never be securitized for a loan and the stock-holding banks have no voting rights within the Regional Federal Reserve Banks as an actual private corporation would allow. Indeed, the by-laws are completely a government construction and laid out by Congressional decree, not by a private decree.

Actually, the Regional Federal Reserve Banks don’t operate or function like a private corporation at all, nor are the member bank stockholders allowed to change the by-laws of the Regional Federal Reserve Banks. They are however, quasi-private to the extent that those member banks own a set amount of shares, but that is it. Thus, the structure, completely unlike a privately held corporation has three levels of organization that is lead by the Federal Reserve Bank Board of Governors a completely government controlled and paid portion of the system, then the 12 Regional Federal Reserve Banks, which are also under the direct oversight of Congress and then the member banks to those Regional Banks, which are stockholders with no corporate voting rights, no power to change by-laws and a dividend that is set by Congressional Act.  Doesn’t sound very private to me, it doesn’t operate or function as a private corporation.

Now, the member banks are members because, by Congressional law, all nationally chartered banks must join and it is optional, but any state chartered bank may, by application also join under  the clause found in12 USCA 282. Now, by joining the Federal Reserve Bank, a member becomes a stockholder, but it is a set amount of stock, there are no majority holders and the dividends are set and remember the stockholders have no voting rights as to the direction of the Regional Banks. Thus, if your claim that the Federal Reserve is privately owned, that is true only to the extent that there are private banks who hold stock, but that is the extent of it, from that point there is no more resemblance to a private corporation. With no voting rights, those member banks have very little power to direct the way the 12 Regional Federal Reserve Banks are run, but the member banks can vote for 6 out of the 9 directors of their respective Regional Federal Reserve Banks. Those directors, in turn, have control over the operations of those Regional Banks, but only to the extent that they operate under the guidelines and the oversight of the Federal Reserve Board of Governors, which has the sole power over all monetary policy, the directors in the 12 Regional Banks have no power over monetary policy.

So, is it private? It has attributes of a private corporation, but is far less of a private corporation than say FannieMae or FreddieMac, which are GSOs with far greater independence than the Federal Reserve Bank or the 12 Regional Federal Reserve Banks. If private ownership is one where the government makes you own something, make you be a member and own stock, then that is a very strange type of private corporation, don't you agree? Addtionally, since the vast amount of interest paid to the Federal Reserve, approximately $78 Billion out of the $80 some odd Billion it collected for 2011, was returned to the U.S. Treasury, as stated in the Federal Reserve Act, the idea that all that interest is retained by either the Federal Reserve or the Banks is simply a myth. Now, it is true that under the Fractional Reserve Fiat Monetary system, banks reap huge benefits from the fact that they can pyramid interest and profit greatly from such a scheme. But, as far as the interest paid to the FED on government Treasuries through the monetization of debt, most, around 97%, is returned to the Treasury itself. Thus, the government is the greatest beneficiary of the operations of the Federal Reserve. 

The problem is that there are influences from both the political and commercial side of the equation that controls decision making with the Federal Reserve, it is neither dependent nor completely independent of those influences, as such, there is a propensity for the FED to act in ways that are not necessarily in the interest of the people of the United States, more than it acts in the interest of politics and the patronage system our government has created through corporatism.

It is better to repeal the Federal Reserve Act, dissolve the complete Central Banking system, repeal the 16th Amendment, repeal the 17th Amendment which nationalized the Senate, return this country to an actual classical gold standard without government influences or intervention. On top of it all, make sure that the States once again take their place as Free, Sovereign and Independent States; that this federal government, being the creation of the States as they acted as deputized agents of the People, who are the only source of Sovereignty, reign in this federal regime and limit it to only the powers delegated to it by the Constitution.   



falak pema's picture

the spiel does not change the reality of FED play under Greenspan and BB. The writing of criminal collusion with Treasury support all along to privilege GS is all over the place. GS philosophy ruled the day, and it was short term and market manipulation all the way.

Republicae's picture

By no means, the fact is that the entire system is rife with corruption, from the government on down, every sort of treason, crime, misconduct, slimmy patronages, militarism, corporatism, croney capitalism, quasi-fascism-socialism, bailouts, regulated monopolies and wholesale give-a-ways of the taxpayers "money". The heads of many of them should be on pikes!

sherryw's picture

Thank you for the explanation! It's been a missing piece of the puzzle for me.

LookingWithAmazement's picture

Finally, Armageddon. About time.

falak pema's picture

so the week sounds less boring. Changed your x mas plans? 

swamp's picture

Hopefully it will happen now. 

philipat's picture

At least in the UK, there is the possibility to fully nationalise RBS as a means of providing additional capital, thereby finally "Doing a Sweden". The Bank could then be made to lend and we would have at least one socially worthwhile Bank?

tom a taxpayer's picture


Reggie - Thanks for the world-class analysis of these world-dominating banks. 

By the way, you mention a chance to "fraternize with pretty woman". Some of us older, experienced men would relish a chance to fraternize with jolie femme Christine Lagarde.



RobertMugabe's picture

Reggie is such a pimp. People like Reggie, Hugh Hendry, and Kyle Bass are personal heroes of mine for going against the tide of MSM idiocy and in process helping many "small people" people protect their assets in distressed times like these. Thank you for all the work you have done! Your research has made an impact on the lives of many, myself included. I cannot thank you enough for your honesty, a rare commodity in an age of CNBC.

mt paul's picture

them french banks 

are gonna be playing ....

hide the baggette soon 

Buck Johnson's picture

Your analysis is beyond well done.  Most of the financial pundits on television don't go anywhere  close to the depth that you analyze and show the public.  Also your meet and greets look great.

max2205's picture

100 years from now people will wonder why investors/banks ever would have put money in things like PIIGS CDS ABX MBS 3X TZOO BIDU CROX Ect. We just need a TULIP 3X to top it off.

flyonmywall's picture

That's a lot of euros to print. Are they going to have enough ink? I highly doubt it.

TexasAggie's picture

The FED would not take kindly if someone else purchased ink the FED requires.

Akrunner907's picture



I would love to join you on one of your field trips.  I find your anlayses to be some of the best, and you go the extra step of interjecting some thought provoking observations.  Thank you! 

Ruffcut's picture

Nice analyst of the situation, but don't currently see this in the option market pricing. THese chains are saying not yet, but they can change in a hurry if the time has come. These market makers are not idiots, you know.

Zero Govt's picture

Fabulous Reggie

You're head and shoulders (pattern) above other financial analysts if the dribbling crones of the sector can even be described as such!

The Freddie Kruger slicing and dicing of walking dead horrors like BNP, Goldman and JPM (plus Bear and Lehmans beforehand) is bang on the button and a wonder to behold ....and in addition warms the cockles of my heart (much needed as i'm 2,000 meters up some chilly European mountains at the mo' looking to be out of reach of all blood-sucking Euro-Zombie Govts!!)

Hope to make one of your luncheons in a few months once i've settled down/in

SemperFord's picture

Be nice if you actually brought some facts Reggie!

Seriously though, thanks for your work, gives us more oppurtunity to make fiat to purchase PM's.

apberusdisvet's picture

Apres moi, le deluge

Now of course the question is who is "moi"?

DSK, Trichet, or pehaps Bernanke?

Or will it be Sarkozy and Merkel in a pissing contest of golden showers?

MacGruber's picture

Yeah, got the message, BUT WHEN??? This French bankning disaster has been forecast for months now.

LawsofPhysics's picture

It will take years and garbage will begin to pile up in the streets all over Europe.

ebworthen's picture

Now all we need is for average citizen depositors to make runs on their banks in Europe and U.S. after deciding that they don't believe in either the banks or their governments; and that cash under the mattress is at least tangible and doesn't cost you $5 a month (or more).

Looks and sounds like you are having fun Reggie, keep up the good work.

Hacked Economy's picture

While not exactly a "run" on my bank, I've nevertheless withdrawn most of my money from my bank accounts, while maintaining cash and PM reserves at home or otherwise off-site.  Not necessarily for TEOTWAWKI, but at least to have sufficient tangible cash for any unforeseen circumstance.

The banks can take their new monthly fees and stuff it.  I still have some accounts at major banks (with only the minimum amounts required to keep them open), but I've opened a credit union account and have begun the process of moving some money over now, in case the Big Boys decide to change their rules even further and try another new way to filch my money from me.

Dugald's picture

But with whom does Union bank ???????

Salvage's picture

Hope you're not talking about Union Bank of California--


Piranhanoia's picture

"Governments are trying to persuade the banks to accept this"     Says it all.

LawsofPhysics's picture

Thanks Reggie.  Bring on the contagon already.  We have hedged accordingly.  Ironic I know.

falak pema's picture

RM : Hope to see you at Cannes film festival next year. You look like you're getting prepared for it!

covert's picture

europe has always been a kleptocracy.