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I. Who Said Federal Reserve Is A Private Banking Institution?

Written by Edwin Sumcad Subject: Federal Reserve

You are taken either by a politically-motivated con artists or an ideological conjurer if you believe that the United States Federal Reserve is a “private” banking institution run by money-crazed maniacs. See accompanying deception … masquerade mask.

       Some readers may be disturbed by this editorial revelation based on judicial records of the high courts, that the Federal Reserve is a government institution, and not a private agency.

       Expected to be emotionally off-balanced by this disclosure are followers of the Congressman from Texas Dr. Ron Paul who leads the campaign to abolish the Federal Reserve – the Central Bank that in dealing with the national economy the nation cannot do without. Learn more about the sophisticated structure of the Central Bank against fraud, and understand the macroeconomic Function of the Fed created by Congress.

      The courts have always ruled that the Fed is always and has always been a government entity. Critics of the Fed deliberately ignore this truth in order to wage a campaign of opposition and hate against what the U.S. Central Bank is doing, which unfortunately, technically beyond the reach of average-thinking Americans.

      In other words, it needs a neutral mind – not the kind hardly made normally functional by a revolutionary rage -- to understand how the Fed works, especially how important the role it plays in shaping this nation’s greatest push-button economic system that it is today!

      Critics of the Federal Reserve are first to admit that our economic life today is incomparably a thousand-fold better than it was before Congress created the nation’s Central Bank in 1913.  This editorial finds it hollow and of no value to argue against those who think otherwise.

      Quid pro quo, it may also sound too haughty if not condescendingly egotistical, for academic studies to conclude that those who stepped out of graduate school of monetary economics are the only ones privileged to know the truth of how complex the Fed operates beyond the grasp of the ordinary man in the street. However, the truth is, it is not the fault of Congress to create a technically complicated central banking system if it has to be the best there is. And throughout the years, it proved to be the best for America the world had ever known.

       Notwithstanding the fact that the reality of this premise is established or given as it is, the wrangling of self-made street economists against the Fed should not be flouted simply because the bitterness they show is not without a cogent reason: Anti-Fed hate campaign usually intensifies when ordinary household feels the pain of a worsening economic pinch, and opportunist politicians quickly jump into it to take advantage of the situation.  Political headhunters just blow it out of proportions by blaming it on opponents or someone if not on something else. To promote their hidden agenda, it is necessary to get the attention of the media by any means possible or any way they can. 

      And that too is given. This explains why we have a tug of war between the pro-private and pro-government advocates of the corporate nature of the Federal Reserve, both pulling in the opposite direction at the end of the rope.    

     The favorite whip of tongue-lashers is that the Fed is a “private” corporations run by banking “thieves”, and that it is not a Federal or a government entity. Even this public whipping that the Fed is a private enterprise has a semblance of truth, but only for the purpose – repeat, only for the purpose -- of the Federal Tort Claims Act [the Act].

      In determining a tort claim filed against a Fed employee, the Court will declare that the Federal Reserve does not operate as a federal agency. Lewis v. United States 680 F.2d 1239 (1982).

     But the same 9th Circuit Court of Appeals has also ruled in the Lewis case itself, that Reserve Banks are “federal instrumentalities”.  The Court cited United States v. Hollingshead, 672 F.2d 751 (9th Cir. 1982). Under the Federal Bribery Statute, a Fed employee is a ‘public official’ “acting for or on behalf of the Government”. S. Rep. No. 2213, 87th Cong., 2nd Sess. (1962), reprinted in (1962) U.S. Code Cong. & Ad. News 3852, 3856. See 18 U.S.C. § 201(a).

      What this means is that, if a tort case is filed against the branch of the Fed anywhere in the United States, the action will be dismissed because for purposes of Federal government liability under the Act, Congress granted only a “limited waiver .. of sovereign immunity …”  to the Fed branch as a Federal government entity of the United States.

      Consequently, in determining the merit of a tort case, the Court will rule as it has ruled, that an employee of the Fed branch is not subject to a federal tort claim -- it will dismiss the case for “lack of subject matter jurisdiction” … the language used by the United States Court of Appeals, Ninth Circuit [680 F.2d 1239 (1982)].

       There is “lack of subject matter jurisdiction” because under the Federal Tort Claims Act, quote: “Congress did not intend to give the federal government direction over the daily operation of the Reserve Banks:

       “It is proposed that the Government shall retain sufficient power over the reserve banks to enable it to exercise a direct authority when necessary to do so, but that it shall in no way attempt to carry on through its own mechanism the routine operations and banking which require detailed knowledge of local and individual credit and which determine the funds of the community in any given instance.

        “In other words, the reserve-bank plan retains to the Government power over the exercise of the broader banking functions, while it leaves to individuals and privately owned institutions the actual direction of routine.  H.R. Report No. 69, 63 Cong. [**6] 1st Sess. 18-19 (1913).” Such is one of the technical “wonders” of the Federal Reserve mechanism when it was created with the wisdom of the American people that was debated in Congress and promulgated into today’s living central banking law.

        Under the Federal Bribery Statute, the U.S. Supreme Court now sealed the definition of what is a ‘public official’ in order to avoid further confusions.

    “To be a public official under the statute [FBS], an individual must possess some degree of official responsibility for carrying out a federal program or policy. Pp. 499-501.” U.S. Supreme Court, Dixson v. United States 465 U.S. 482 (1984) 465 U.S. 482.

      How many Americans read the Dixson and Hollingshead cases? Fed- bashers purposely close their eyes and pay no attention to the judicial dicta enunciated in those landmark cases, albeit, it is written in stone that the Fed is in fact – and it is the truth -- a government entity that Congress created it to be.

      Federal Reserve Banks are “federal instrumentalities” also for purposes of immunity from state taxation. This has been decided by the 1st Circuit Court of Appeals in 1975, re, Federal Reserve Bank of Boston v. Commissioner of Corporations & Taxation, 499 F.2d 60, following a remand, and in Federal Reserve Bank of Minneapolis v. Register of Deeds, 288 Mich. 120, 248 N.W. 667 (1939).

       In still many similar cases, e.g. Land Bank v. Vismarck Lumber Co., 314 U.S. 95, 102, 62 S. Ct. 1, 5, 86 L. Ed. 65 (1941); Rust v. Johnson, 597 F.2d 174, 178 (9th Cir. 1979), cert. denied, 444 U.S. 964, 100 S. Ct. 450, 62 L. Ed. 2d 376 (1979), Reserve Banks “…clearly perform an important governmental function … which further the nation’s fiscal policy.”

       In 1979, the whole Federal Reserve System has also been challenged by radical agnostics in central banking as a non-governmental entity in the case of  Brink’s Inc. v. Board of Governors of the Federal Reserve System, 466 F. Supp. 116 (D.D.C.1979) under the Service Contract Act, 41 U.S.C. § 351. Citing the Boston and Minneapolis Federal Reserve Bank cases, the Court ruled that “the Federal Reserve Bank is a federal [**12] instrumentality.”

      There are more of these judiciary proofs where the high courts declared without any iota of doubt that the Federal Reserve is not a private but a government institution. 

      However, no matter how exhaustive the presentation of proof that the Fed is a federal entity and not a “private” agency, a very angry ignoramus or a revolutionary political weirdo would still swear that the United States central bank is a private ruffian cartel run by financial gangsters and purse muggers, just to simulate Jesus Christ’s Calvary in carrying the Cross of evil America. The Cross stands for America’s condemnable wrongdoing and contemptible “sins”, which President Obama himself admitted in the April 2009 American Summit as "errors" of the evil American Empire.   

      Examples of those “sins” are those preposterous accusations that America is controlled by a rogue institution called the Federal Reserve, and that 911 was not the handiwork of Al Qaeda assassins but of Americans themselves! 

       Naturally, normal right thinking Americans are totally outraged by such malicious insult; it is a blatant display of spiteful arrogance; these ideological innuendoes of the radical left I need not assure anyone anymore to dispel any doubt why the public is insuperably mortified with total disbelief!

     Considering that the Fed is a federal entity, all what incensed Fed abolitionists need to do is bring to court any corrupt member of the Central Bank whom they alleged as some kind of a monetary vampire sucking the blood money of the American people, and like those bad guys of the underworld in the Dixson case, the court of the land will consign them to jail to rot the rest of their remaining life on earth.

      I must stress the need to switch on a brighter light to guide readers in the maze of legalism on how to digest this litany of court cases. I must summarize what have been discussed so far, as follows: Notice carefully, that all these court rulings declaring the Fed as a government body have been judicially differentiated from the Lewis case under the Federal Tort Claims Act.

      As the courts stated, governmental function of the Fed is “not determinative in tort claims actions”. The reason for this is that traditional agency principles govern tort liability that requires the showing of control in the performance of the principal’s agent.

     I take the pain of quoting and annotating these landmark court decisions to dispel hate-motivated accusations, which poison the mind of the ignorant into believing, that the nation’s Federal Reserve is a private bank under the control of financial hijackers.

     Our Federal Reserve System – known as one of the best Central Banks in the world [those schooled in the comparative study of monetary economics are aware of this phenomenon] -- is a creation of the United States Congress, not a creation of, in the language of a very angry protester, “slimy crawlers from the bowels of the earth that suck the blood of this nation”. We hear this crap when extremely pissed off anti-Fed ax-welders who lose control of themselves spit the anger off their chest right into the face of those who argue otherwise because they knew better. 

      If it cannot be disputed that the Fed is by law a creation of Congress [only a very angry leftist radical or a crusading oddball among opportunist politicians or the hallucinating mind of a lost street urchin suffering a delusion of grandeur would pose a challenge that the Fed was not created by Congress], then in truth it is you and I who created the Fed because the members of the Legislature that created this government entity, are only representing each one of us – we the American people who, in the exercise of our constitutional prerogative, had voted each one of them to public office.

       Many cranks may cut the nose to spite the face, but it does not alter the fact that it is we, the American people, who created the United States Federal Reserve under our system of democracy.

       There are propaganda videos pointing to very rich bankers whom the Government acting through Congress originally took as “partners” in the creation of the Fed. Their financial expertise is being used to help managed the elaborately established national banking system. 

       But no matter how acerbic the public outcry of the misguided few in pressuring Congress to take over the job of the Fed because it is allegedly a private institution being run by “bandits”, it will never happen because first, the so-called “thugs” to catch are only pigments of the imagination, and second, it is unwise to do so for practical reasons. Congress does not have the needed banking expertise to run the system.

      If Fed officials or employees are “thieves” as irate grouches and teeth-gnashing sulkers pictured them to be, we have the court of law that will decide their fate before a hangman’s noose is put around their neck. But their accusers must act and face them in court, instead of pulling off their hair in tantrum or just quacking like noisy ducklings to attract the attention of CNN, Larry King, New York Times, Lost Angeles Times or The Washington Post.

      It is my honest and sincere hope that this eye-opening expose’ written in the simplest editorial presentation possible, the general public will stop listening to economic saboteurs from the left, or desist from wasting their time patronizing the arguments of smart alecks and shouldn’t listen anymore to disgruntled pen-pushers whose writings exhibit ostentatious or smart-aleckism in their revolutionary campaign against the nation’s Central Bank. One of the visible reasons for this caveat is that obviously, anti-Fed-mongers have a hidden ax to grind.

      To express a protest or dislike for any given reason, is a constitutional right, and so is the right to be intentionally ignorant of what is being disliked or protested, like this nation’s much maligned Central Bank that whirled America’s new millennium of progress from that spaceless life of the 1920s’ depression then, to the depth of outer space, now reaching the edge of the Universe and with the wonders of advance scientific know-how, to discover a new world in another planet.

      In this campaign against the Fed primarily based on false allegation that the Fed is a private institution, the court rulings I have presented that are deliberately ignored, stand as proof that bucket kickers are attacking the Fed with a clandestine agenda. 

      Carrying along a hate-generating baggage I have just shown, is prevalent among politicians coming from both sides of the aisles who would rather suppress the truth, than lose their chance to jump into the limelight and salivate a lie to attract support and patronage.

     We are captives of self-interest, and to the exclusion of others, we lose sight of the commonweal.  Since ignorance, lying and anger aggravate the seriousness of this attitudinal problem, only those who can escape from the captivity of their own self-centeredness can make this hopeless situation reversible.  #


© Copyright Edwin A. Sumcad. access June 25, 2009.

    [Note: Part II promises more surprises.]

    The writer is an award-winning journalist. Read more about the author and his writings or you may e-mail your comment at

[Note: This copyright editorial also appears in the author’s column at Link: Sumcad]

14 Comments in Response to

Comment by Rick Meyers
Entered on:


As for the FED Reserves: Lewis v. United States, 680 F.2d 1239 (1982) Plaintiff, who was injured by vehicle owned and operated by a federal reserve bank, brought action alleging jurisdiction under the Federal Tort Claims Act. The United States District Court for the Central District of California, David W. Williams, J., dismissed holding that federal reserve bank was not a federal agency within meaning of Act and that the court therefore lacked subject-matter jurisdiction. Appeal was taken. The Court of Appeals, Poole, Circuit Judge, held that federal reserve banks are not federal instrumentalities for purposes of the Act, but are independent, privately owned and locally controlled corporations.
Comment by Rick Meyers
Entered on:


This author has to be somehow related to feds or is a fed. Then to try and misconstrue the court cases to exploit the unwitting is not only asinine but out right perverted. Can anyone say propaganda! Hitler supporter, etc.
Comment by Dave Hodges
Entered on:

 Are you auditioning for a for a job in the treasury department? 

Let's check to see if this guy has paid  his taxes.  

 If they ever make a movie about the FED they will probably call it The Planet of the Rapes. Speaking of planets, which one are you on? Simply amazing!

Say hello to Ben and Timothy for us. Good thing I do not have my finger on the delete key!

Comment by Powell Gammill
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I love you guys.  I have also had considerable to drink...$5 22 oz. Kiltlifters.  Yum. 

Comment by Surfyogi Dave
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What a pompous arse, spewing a load of stinking, steaming dung!  There are too many inaccuracies and misrepresentations to address, but let's start with the term he used regularly: instrumentality: a means; serving some purpose.  A hammer is used by a carpenter as an instrumentality to drive nails into wood.  It doesn't mean the hammer is a carpenter, nor does it mean the hammer is allowed to join the Union.  It's a tool.  The government is allowed to create instrumentalities to assist in governing.  Secondly, even if they were legally established and part of the government, which of the 3 branches do they belong to?  Executive?  No.  Judicial?  No.  Legislative?  Again, no!   And why do they always hide behind the fact that they are NOT a part of the government that they therefore don't have to answer the questions? Eg. "Where did the bailout money go?"  "We will not tell you".  WTF? Furthermore, if they're the 8th wonder of the world as you imply, then why is 1 dollar now worth 3.3 cents compared to its value in 1913 when this PRIVATE institution was created through deception and an outright lie as to it having been ratified?  You are a disgrace to the concept of truth.  That horror of an entity created the depressions (and the one that is coming at us right now!) and has brought nothing but a continuously devaluing currency, lower living standards, the removal of our gold and silver backing (making it much easier for them to manipulate the "value" of our currency) and violating the crystal clear dictates of our beloved Constitution in doing so.  I could go on and on at the inane ludicrous nature of this article.  How much did your handlers pay you...Judas?  Why don't you follow in his footsteps just a little bit further and do us all a favor?





Comment by Accurate Perceptions
Entered on:

The most fundamental problem with the Federal Reserve System is that it is a de facto open ended credit card. 


Prior to 1913 the federal government had to go to the people to fund their operations.

But with the inception of the Federal Reserve System,  a group of bankers create money magically out of vapor and loan it at interest to our government.

The Federal Reserve System stands ready to loan the productivity of the nation to the most demonstrably corrupt group of people in this nation.  Politicians.

Without the essential check and balance of the people voting with their pocket book, our government has enslaved us, our children, and their children.

A nations money needs to be as equitable as its set of "weights and measures". 

Each monetary unit of equal value for all users. 

Not freely created and manipulated by some.  Not forcibly pushed on others.

Comment by rachel cody
Entered on:

What an arrogant writer. He went out of his way to insult those with opposing views and brand people, such as myself, as ignorant, arrogant and self serving.  

The simple fact is that FED was never ratified by the states which makes it illegal to begin with. Doesn't matter what the "judges" declare or what cases went before them. The Fed was never legal for it was never ratified. End of story. 

Comment by Robert Dunn
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Hey FreeDomMonkey,

I applaude FP for the opportunity for people (be they right or wrong) to express their opinions. And in this case, I expected and enjoy the rebuttal from all those who post their comments to this fairytale of a story.

Comment by Jaime Yarbrough
Entered on:

Regardless of the ownership of the Fed. the fact remains it should have no immunity to being audited as any wholesome accountable institution of a freely elected peoples government. 

Comment by Jason Dimitrov
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Is that your entire case for the FED? We all know the FED was an act of congress. Of course the courts will defend and protect its legality as a government institution. Like you said, quid pro quo. That is not much of an argument, if you want to call it that. The Constitution also guarantees no direct unapportioned taxes yet the IRS is still "legally" able to enforce a graduated tax scale. Haven't seen much interest from the courts on that matter; just a mound of obscure legal jargon which is open to interpretation, as is the Constitution, apparently. The 16th amendment and the federal reserve act were both committed in 1913, coincidence? You obviously still view the state as a friendly humanitarian assembly of people doing what is best for you and the rest of society. Here's another example; in the states opinion there is nothing wrong with aspartame, bovine growth hormones, genetically modified foods, fluoridation, and subsidizing all the industries that are killing people. The FDA and the USDA are no more themselves then they are Monsanto. So what is it that you are defending? Ultimate corruption of power?

Comment by Paul Zimmerman
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 Why post the psychotic free association ramblings of a fool like this?  If I wanted to be exposed to this nonsense I'd turn to the MSM.

Comment by Robert Dunn
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There is only one point in your article with which I agree completely, quote "To express a protest or dislike for any reason is a constitutional right". Any by that quote I assume you are referring to the 1st amendment. Although that in itself is under such attack and almost non-existent anymore. Edwin, you opened up a whole can of whoopass. However eloquently put, even with your "case history" of judges who ruled otherwise, there are numerous points (too many to mention here) that you conveninently ignored which are also written history which negate your stronghold. I seriously doubt that you will make any converts here. And if that is the best you can throw out there to sway people over the fence, then you are surely dillusional and of the minority. NEXT!

Comment by Patriot 2012
Entered on:

UH? is this a JOKE? Whoever this person is, is sprewing lies out. Actually better, this person is a CIA or FED agent. NO one should listen to this crap nor believe it. The Fed Reserve is Illegal! Period. They are the enemy and should be shut down. I'd sure like to know where my money is and where it goes. If they are so secret they cannot be in this country. I'd say, Down with the FED RESERVE and this Edwin Sumcad is a FRAUD!

Comment by Richard Stone
Entered on:

 If what you say is true that the Fed is a government entiy why is it that when you try to look up the Fed in the phone book under the goverment section it is not there? Even the government could not make such a big mistake. They don't even claim it to be part of the goverment! So Edwin, go fly a kite.

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