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“The Federal Reserve is an agency of US Government created by Congress in 1913. The member banks under Federal Reserve are actually private corporations and all the stocks of Federal Reserve are owned by member banks. Federal reserve notes are in theory backed by the assets of the Federal Reserve, but primarily by the power of Congress to lay taxes on people. See excerpts of interview with Mr. Ron Supinski of the Public Information Department of the San Francisco, Federal Reserve Bank on October 8, 1992. [1]”

from: http://www.sourcewatch.org/index.php?title=Federal_Reserve_Corporation

footnote link: http://www.maxexchange.com/ybj/chapter_1.htm

From: Lewis v. United States, 680 F.2d 1239 (1982):

“Federal reserve banks are not federal instrumentalities for purposes of a Federal Tort Claims Act, but are independent, privately owned and locally controlled corporations in light of fact that direct supervision and control of each bank is exercised by board of directors, federal reserve banks, though heavily regulated, are locally controlled by their member banks, banks are listed neither as “wholly owned” government corporations nor as “mixed ownership” corporations; federal reserve banks receive no appropriated funds from Congress and the banks are empowered to sue and be sued in their own names. . . .”

Futher: the Appeals Court “held that federal reserve banks are not federal instrumentalities for purposes of the Act, but are independent, privately owned and locally controlled corporations.”

This article notes that the Federal Reserve operates outside of the Constitution from the standpoint that just like GM or Microsoft, it is not organized under any of the three branches of government enumerated in the Constitution.

I can find no record that Federal Reserve has ever had an independent audit. That would be an excellent place to start. I would raise the issue of how Sarbanes-Oxley touches on how publicly listed shareholders of the Federal Reserve like Citibank can “mark to market” the value of their shares in the Federal Reserve corporation.

Federal reserve notes are in theory backed by the assets of the Federal Reserve,

That's bull. Dollars are backed by everything they can buy, which is quite a lot.

“Federal reserve banks are not federal instrumentalities for purposes of a Federal Tort Claims Act, but are independent, privately owned and locally controlled corporations in light of fact that direct supervision and control of each bank is exercised by board of directors, federal reserve banks, though heavily regulated, are locally controlled by their member banks, banks are listed neither as “wholly owned” government corporations nor as “mixed ownership” corporations; federal reserve banks receive no appropriated funds from Congress and the banks are empowered to sue and be sued in their own names. . . .”

So does this mean that the Federal Reserve bank in Atlanta is incorporated in the state of Georgia?

This article notes that the Federal Reserve operates outside of the Constitution from the standpoint that just like GM or Microsoft, it is not organized under any of the three branches of government enumerated in the Constitution.

The article also notes that the Fed was created by Congress, and can be dismantled by Congress. Since the Constitution gives Congress broad powers over commerce and the monetary system, I'd say that makes it constitutional. The Treasury was also created by Congress, but I never see anyone complaining about that.

The article also whines that much money creation is done by the loan process of private banks. So what? That's the way it happened before the Fed was created. Some banks even used their own currency. If anything, the creation of the Fed put money creation more under the direction of the federal government.