true
Federal reserve banks do not "clear" checks. That is done by the bank that the check was written on.
The Marriner S. Eccles Federal Reserve Board Building, on Constitution Avenue between 20th and 21st Streets, NW, designed by Paul Phillipe Cret and completed in 1937.On the south side of the Eccles building (facing the National Mall) the inscription reads 'Federal Reserve Board'
A captive regulator of the banking industry. It is a collection of economists and bankers who decide the levels banks borrow money at. It acts as a central bank, recently with more discretion to give accommodating loans. As a regulator it's independent of almost all oversight. It also tries to regulate unregulatable macroeconomics by extending credit when banks lend more money than they have. ...an oligarchy, an ultimate usurer, a digital money printer, and underwriter of all government debt.
D. A newspaper article written in January 2013
The "ten times" you refer to may refer to the percentage OF their deposits that banks may lend. I don't know what the actual number or formula is but, as I recall, it's about 90% - meaning they have to keep 10% of the total deposits they receive in cash and may invest the rest. So, you might have read that they lend out 10 times the amount of cash they have on hand. Whatever the amount, it's now set by strict regulation. The percentage is based on the experience of banks over many decades and takes in to considerations the ebb and flow of withdrawals. It's very predictable how much cash a bank will need on hand to meet that 'normal' flow of withdrawals. This leaves the rest available to invest (in the form of loans for houses, cars, business loans and the like) - which the bank has to do in order to earn a return so they can give their Depositor's a return. This explains why a "run on the bank" results in the bank failing. Here's how it works: 1) Let's say the bank has 15 depositors, each depositing $10,000. The bank now has $150,000. 2) In order to provide a return to those depositors, the bank takes 90% of the $150,000 ($135,000) and invests it - usually in the form of financing the purchase of a house, car or a loan to a business - leaving $15,000 in cash on hand. 3) Because of the law of large numbers tested over time, the bank knows that at any given time, only 15% of the total depositors (let's round that to two depositors for our example) will come in to withdraw funds and the average withdrawal will only be, say, $5,000. Meaning the bank will have cash demands for $10,000 with $15,000 in cash on hand to cover the withdrawals. 3) The bank, of course, is betting that they'll be able to earn a high enough interest rate from what they've charged to Borrowers that, after they absorb the losses from defaulting Borrowers and pay their overhead (salaries, building expenses, etc.), they'll have enough left over to make a profit. That's their business. ...which works well until, for some reason, their Depositors lose confidence. When that happens (as it did in the Great Depression), a much larger percentage of their Depositors 'run' to the bank to take their money out. The numbers look like this: 1) The bank is sitting with $135,000 of the Depositors' money loaned out and $15,000 of it in cash on hand to handle withdrawals and overhead. 2) Something cataclysmically rocks Depositors' confidence - the stock market falls, a war starts, etc. 3) The next morning, instead of two Depositors, twelve show up for their money. 4) The bank now needs to return $120,000 (12 Depositors x $10,000 each in deposits) 5) They only have $15,000 - total - on hand against the immediate demand for $120,000. (The bank doesn't have that much cash on hand because it went to pay for the business expansion, cars and houses the Borrowers borrowed it for.) 6) They close their doors and never re-open. Also called a "liquidity crisis," it's not dissimilar to the current problems banks are having now (but then, that wasn't your question). Fortunately, we have backup systems now to keep the banks open (think: "Reserve" as in "Federal Reserve"). A network of banks, the Federal Reserve and other systems kick in to get money to the banks that need it to meet those obligations and our banking system has not suffered the same kind of collapse since. Bottom Dollar Here is more information by AZDUDE: The information given in the answer above is accurate but not adequate. There existed a Central Bank a few years before Federal Reserve Bank came into existance. It was closed down by thoughtful leaders because of forseen reasons. The very reasons that lead to many other kinds of depressions after the Great Depression. Please research more to understand this or watch the documentaries Zeitgeist, The Movie and Zeitgeist: Addendum (google for videos) while constantly trying to validate what is said in the movies. PS: Federal Reserve Bank avoided depressions like Great Depressions in USA. But it created lot worse conditions in many other countries for keeping the money stable and bussinesses profitable in USA. In this monetory system, someone has to suffer for other's comfort. ALSO: http://wiki.answers.com/Q/Where_does_the_bank_get_its_money_to_lend
A. Jerome Clifford has written: 'The independence of the Federal Reserve System' -- subject(s): Federal Reserve banks
John P. Ranchett has written: 'The Federal Reserve' -- subject(s): Economic policy, Board of Governors of the Federal Reserve System (U.S.)., Monetary policy, Federal Reserve banks
Federal reserve banks do not "clear" checks. That is done by the bank that the check was written on.
Welford S. Farmer has written: 'Federal Reserve bank directors' -- subject(s): Board of Governors of the Federal Reserve System (U.S.)
David Edwin Albertson has written: 'Timing and effectiveness of Federal Reserve policy, 1951-1959' -- subject(s): Credit, Federal Reserve banks
James P. Ford has written: 'The changing role of the Federal Reserve System in monetary control' -- subject(s): Monetary policy, Federal Reserve banks
Karl Richard Bopp has written: 'Hjalmar Schacht' 'Federal Reserve policy' -- subject(s): Credit, Currency question, Federal Reserve banks, Monetary policy
Robert Edward Knight has written: 'Federal Reserve system policies and their effects on the banking system' -- subject(s): Monetary policy, Banks and banking, Federal Reserve banks
Wickliffe B. Vennard has written: 'The Federal Reserve hoax (formerly The Federal Reserve corporation): the age of deception' -- subject(s): Politics and government, Currency question, Federal Reserve banks
Alfred Broaddus has written: 'A primer on the fed' -- subject(s): Federal Reserve banks
Leonard P. Cheshire has written: 'U.S. Federal Reserve sharing' -- subject(s): Economics
The Marriner S. Eccles Federal Reserve Board Building, on Constitution Avenue between 20th and 21st Streets, NW, designed by Paul Phillipe Cret and completed in 1937.On the south side of the Eccles building (facing the National Mall) the inscription reads 'Federal Reserve Board'