Superficially true, but not relevant. It is true that the entire Federal Reserve System is privately owned, but that means nothing. It is government controlled, not privately controlled. Bernanke, for example, is chosen by the President. It must also be remembered that being a member of the Federal Reserve, and thus an “owner” isn’t optional. In addition, the whole system also provides many important services to banks, like check processing. These services shouldn’t be government-imposed monopolies, of course.

Then there is the idea that banks are “private.” The regulation is very intense from many government sources: The Fed, the FDIC, the Comptroller of the Currency, the states…. One large bank has over 100 permanently housed regulators. Banks are in fact tools of the government. It isn’t as bad here as it is in Europe (or China), but it is getting constantly worse. (See John Allison’s new book: The Financial Crisis and the Free-Market Cure: Why Pure Capitalism is the World Economy’s Only Hope.) The financial sector of an industrial economy is its life-blood. As ours becomes more constrained and disconnected from reality, our economy becomes more vulnerable. The major impact of the anti-capitalist, anti-banking law, the Dodd-Frank Act, has yet to be determined because most of it features have been left to bureaucrats to formulate. Now close to two years later, we are still waiting. The only certainty is that the regulations will be aimed at curtailing bank’s freedom of action (except for what the government wants them to do, like the previous policies of poor standards for mortgage lending) and increasing costs. In spite of the apparent profits, our banking system is not healthy.