The other day I realized the Board of Governers cannot force FED member banks to loan to each other at the target Federal Funds Rate, that the target rate is simply set to direct monetary policy. Often, we think of the FED as one giant bank, but it seems it is rather a cartel of regional banks, each consisting of many member banks. This led me down a rabbit hole of ?'s. Here goes:
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Are there any aspects to the FED above the regional banks, besides the Board of Governers and the Federal Open Market Commitee?
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What entity keeps the government’s bank account?
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Who is buying and holding the government securities? I know the FOMC sets the monetary policy, but do they actually buy the securities as well? If so, where do they end up being held?
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How do primary dealers come into play with the buying and selling of securities? Who gets to determine who gets to be a primary dealer? If the FED buys securities from primary dealers, where do the primary dealers buy them from? Why does this group of merchants even exist?
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Can there be cases where some parts of the cartel benefit by being able to loan out new money while the other banks are hurt by losing real rates of return on existing loans?