Who Owns the Federal Reserve Bank of New York: Member Banks and Stock

The Federal Reserve Bank of New York is owned by the commercial banks that hold membership in the Federal Reserve System within its district. Those member banks are required to buy stock in the New York Fed, but the stock is nothing like corporate stock: it cannot be sold or traded, it does not gain value, and it gives holders no claim on the bank’s profits beyond a fixed dividend. In practical terms, ownership here means mandatory participation, not control or investment return.

Which Banks Are the Owners

Every nationally chartered bank operating in the New York Fed’s territory is required by law to join the Federal Reserve System and buy stock in the New York Fed.¹ That territory is the Second District, which covers New York State, northern New Jersey, southwestern Connecticut (Fairfield County), Puerto Rico, and the U.S. Virgin Islands.² Because many of the country’s largest financial institutions are headquartered in this region, the New York Fed has more capital stock outstanding than any other Reserve Bank.

State-chartered banks are not required to participate. They may apply for membership through the Board of Governors, and if accepted they subscribe to stock under the same rules as national banks.³

How Much Stock Each Member Bank Holds

Each member bank must subscribe to stock equal to 6 percent of its own capital and surplus. Half is paid in; the other half remains on call, meaning the Board of Governors can require payment if it becomes necessary.⁴ Each share has a par value of $100.⁵

The size of a bank’s holding is not fixed. After each quarterly Call Report, the Reserve Bank adjusts the subscription so it always equals 6 percent of the bank’s current capital and surplus.⁴ If a bank’s capital grows, it buys more stock. If its capital shrinks, it surrenders shares. No bank can accumulate extra stock to gain more influence.

Why This Ownership Is Unlike Normal Stock Ownership

Federal Reserve stock shares almost no characteristics with the stock you could buy on an exchange. The differences are structural:

Shares cannot be sold, traded, or pledged as collateral. Federal law explicitly prohibits member banks from transferring the stock.⁵
The stock does not appreciate. It stays at its $100 par value regardless of how the New York Fed performs.
Shareholders have no claim on the bank’s profits. They receive a fixed dividend and nothing more; any surplus goes to the U.S. Treasury.
Purchase is not voluntary. A member bank cannot hold more stock than its subscription requires and cannot hold less.

The stock behaves more like a mandatory deposit tied to membership than an investment. Federal Reserve banks, including their capital stock, surplus, and income, are exempt from federal, state, and local taxation (real estate taxes excepted), which means the dividends member banks collect are tax-exempt.⁶

What Member Banks Actually Receive

The return on Federal Reserve stock is a fixed dividend on paid-in capital, not a share of earnings. The rate depends on the size of the member bank, under a two-tier system created by the Fixing America’s Surface Transportation (FAST) Act in 2016:⁷

Smaller member banks, below the statutory asset threshold, receive a flat 6 percent annual dividend on paid-in stock, as originally set by the Federal Reserve Act.
Larger member banks, above the threshold, receive the lesser of 6 percent or the highest yield from the most recent 10-year Treasury note auction before the payment date.⁸

The threshold began at $10 billion in total consolidated assets and is adjusted for inflation each year by the Board of Governors using the GDP Price Index, so the current figure sits above $10 billion.⁹ Under either tier the dividend is a modest, capped payment on capital that member banks are required to tie up.

How Much Control Member Banks Have

The New York Fed is overseen by a nine-member board of directors divided into three classes of three.¹⁰

Class A directors represent the member banks themselves and are elected by them. They are often banking executives.
Class B directors represent the public. They are also elected by member banks, but they cannot be officers, directors, or employees of any bank.¹¹
Class C directors are appointed by the Board of Governors in Washington. They must have lived in the Second District for at least two years, and the Board of Governors picks the bank’s chair and deputy chair from this group.¹²

To keep the largest banks from dominating elections, the Board of Governors divides member banks into three groups of roughly similar capitalization. Each group elects one Class A and one Class B director.¹³ A small community bank’s vote carries the same weight within its group as a large bank’s vote carries in its own. Combined with the three Class C directors appointed by Washington, the structure lets member banks influence governance without controlling it.

Where the Profits Go

The New York Fed earns most of its income from interest on the securities it holds in the System Open Market Account.¹⁴ After paying dividends to member banks and covering operating expenses, the remainder feeds a surplus fund. Federal law caps the combined surplus of all twelve Reserve Banks at $6.825 billion; anything above that goes to the U.S. Treasury.¹⁵

Historically these Treasury remittances have run to tens of billions of dollars a year across the Federal Reserve System. Since 2022, however, the Fed’s operating costs have exceeded its income, because the interest it pays on bank reserves and other liabilities has outpaced the interest it earns on its long-duration securities. When that happens, the Fed records a “deferred asset” representing the cumulative shortfall that must be recovered from future earnings before Treasury remittances can resume.

As of late February 2026, the Fed’s cumulative deferred asset stood at roughly $245.6 billion, and remittances had not yet resumed.¹⁶ The deferred asset grew from about $133 billion at the end of 2023 to roughly $216 billion by the end of 2024.¹⁷ Member banks have no claim to any of this surplus and no obligation to cover the shortfall. Once income again exceeds expenses, the Fed will pay down the deferred asset in full before sending anything to the Treasury.

The One Liability That Comes With Holding the Stock

Owning stock in the New York Fed is not a purely one-way arrangement. Under federal law, every shareholder of a Federal Reserve Bank is individually responsible for the bank’s contracts and debts up to the par value of its stock subscription, in addition to the amount already paid in.¹⁸ The provision has never been triggered, because the Federal Reserve System has never faced a situation requiring shareholders to cover its debts. It remains on the books all the same.

1
Board of Governors of the Federal Reserve System. Who Owns the Federal Reserve?
2
Federal Reserve Bank of New York. Second District Map
3
Office of the Law Revision Counsel. 12 U.S. Code 321 – Application for Membership
4
eCFR. 12 CFR 209.4 – Amounts and Payments for Subscriptions and Cancellations; Timing and Rate of Dividends
5
Office of the Law Revision Counsel. 12 U.S. Code 287 – Value of Shares of Stock; Increase and Decrease of Capital
6
Board of Governors of the Federal Reserve System. Federal Reserve Act – Section 7. Division of Earnings
7
Federal Register. Federal Reserve Bank Capital Stock
8
Board of Governors of the Federal Reserve System. Federal Reserve Board Issues Final Rule Regarding Dividend Payments on Reserve Bank Capital Stock
9
Federal Register. Federal Reserve Bank Capital Stock
10
Office of the Law Revision Counsel. 12 USC 302 – Number of Members; Classes
11
Justia Law. 12 U.S.C. 303 – Qualifications and Disabilities
12
Office of the Law Revision Counsel. 12 USC 305 – Class C Directors; Selection; Federal Reserve Agent
13
Office of the Law Revision Counsel. 12 USC 304 – Class A and Class B Directors; Selection
14
Federal Reserve Bank of New York. Domestic Market Operations
15
Office of the Law Revision Counsel. 12 USC 289 – Dividends and Surplus Funds of Reserve Banks; Transfer for Fiscal Year 2000
16
Board of Governors of the Federal Reserve System. Factors Affecting Reserve Balances – H.4.1
17
Board of Governors of the Federal Reserve System. Combined Financial Statements of the Federal Reserve Banks, 2024
18
Office of the Law Revision Counsel. 12 U.S. Code 502 – Liability of Shareholders of Federal Reserve Banks on Contracts, Etc.