FROM THE EDITOR: Dear reader: this is the third of the fourth part of this series, The Federal Reserve Cartel, which chronically explains the history of the Fed and the false perception that resulted in Americans believing it’s part of the U.S. Government when in fact, not only the Fed Reserve is a private for-profit bank consorsium that ought to be abolished, and which is unconstitutional.
This is an excerpt from a book by Dean Henderson
To this end: almost all banks in the U.S. are members of The Fed, and by virtue of its enormous capital resources the New York Federal Reserve rules the Fed. The true center of power though is the Federal Open Market Committee (FOMC), which only a NY Fed President has a permanent voting seat.
The FOMC issues directives on monetary policy that are executed from the 8th floor of the NY Fed, a fortress modeled after the Bank of England. In the fifth sub-basement of this 14-story stone hulk lays 10,300 tons of mostly non-US gold, one-third of the world’s gold reserves and the largest gold stockpile in the world.
The world of money is increasingly computerized. With the introduction by the Eight Families of complicated financial instruments like derivatives, options, puts and futures; the volume of inter-bank transactions took a quantum leap.
To handle this the Fed built a superhighway eerily known as CHIPS (Clearing Interbank Payment System), which is based in New York and modeled after Morgan’s Belgium-based Euro-Clear – also known as “The Beast.”
When the Fed was created, five NY banks- Citibank, Chase, Chemical Bank, Manufacturers Hanover and Bankers Trust- held a 43 percent stake in the New York Fed. By 1983 these same five banks owned 53 percent of the NY Fed. By year 2000, the newly merged Citigroup, JP Morgan Chase and Deutsche Bank combines owned even bigger chunks, as did the European faction of the Eight Families. Collectively they own majority stock in every Fortune 500 corporations and do the bulk of stock and bond trading. In 1955 the above five banks accounted for 15 percent of all stock trades. By 1985 they were involved in 85 percent of all stock transactions.
Still more powerful are the investment banks that bear the names of many of the Eight Families. In 1982, while Morgan bankers presided over negotiations between Britain and Argentina after the Falklands War, President Reagan pushed through SEC Rule 415, which helped consolidate securities underwriting in the six large investment houses owned by the Eight Families: Goldman Sachs, Merrill Lynch, Morgan Stanley, Salomon Brothers, First Boston and Lehman Brothers. These banks further consolidated their power via the merger mania of 1980s and 1990s.
American Express swallowed up both Lehm2an Brothers-Kuhn Loeb – which had merged in 1977 – and Shearson Lehman-Rhoades. The Israel Moses Seif’s Banca de la Svizzera Italiana bought a 7 percent stake in Lehman Brothers.
Salomon Brothers nabbed Philbro from the South African Oppenheimer family, then bought Smith Barney. All three then became part of Traveler’s Group, headed by Sandy Weill of the David-Weill family, which controls Lazard Freres, through senior partner Michel David-Weill. Citibank then bought Travelers to form Citigroup. S.G. Warburg, of which Oppenheimer’s Chartered Consolidated owns a 9 percent stake, joined the old money Banque Paribas- which merged into Merrill Lynch in 1984. Union Bank of Switzerland acquired Paine Webber, while Morgan Stanley ate up Dean Witter and purchased Discover credit card operations from Sears.
Kuhn Loeb-controlled First Boston merged with Credit Suisse, which had already absorbed White-Weld, to become CS First Boston- the major player in the dirty London Eurobond market. Merrill Lynch – merged into Bank of America in 2008 – is the major player on the US side of this trade tracks. Swiss Banking Corporation merged with London’s biggest investment house S.G. Warburg to create SBC Warburg, while Warburg became more intertwined with Merrill Lynch through their 1998 Mercury Assets tie up. The Warburg’s formed another venture with Union Bank of Switzerland, creating powerhouse UBS Warburg. Deutsche Bank bought Banker’s Trust and Alex Brown to briefly become the world’s largest bank with $882 billion in assets. With repeal of Glass-Steagal, the line between investment, commercial and private, banking disappeared.
This handful of investment banks exerts an enormous amount of control over the global economy. Their activities include: advising Third World debt negotiations, handling mergers and breakups, creating companies to fill a perceived economic void through the launching of initial public stock offerings (IPOs), underwriting all stocks, underwriting all corporate and government bond issuance, and pulling the bandwagon down the road of privatization and globalization of the world economy.
NOTE FROM THE EDITOR: MORE TO COME NEXT WEEK
