The Federal Reserve is one of the most criticized institutions in America, and it deserves a good deal of that criticism. It also sits under a thick layer of myth, and the myths do the institution a strange favor: by attaching the fair, documented complaints to stories that are simply false, they make the whole critique easy to wave away. This post does what the Rothschild piece did, and separates the two. There is a real and serious case to be made about the Fed's conflicts of interest, its revolving door with Wall Street, and a genuine trading scandal. And there are two enormously popular anti-Fed stories, one about John F. Kennedy and one about Woodrow Wilson, that are not true. Telling them apart is the whole point. Everything below is from the record.
What the Fed actually is
Start with the structure, because even that is widely misdescribed. The Federal Reserve Act was signed by President Woodrow Wilson on December 23, 1913 (U.S. Senate). The system has three parts: a Board of Governors, whose seven members are nominated by the President and confirmed by the Senate and which is "an agency of the federal government that reports to and is directly accountable to Congress"; the Federal Open Market Committee that sets interest-rate policy; and twelve regional Reserve Banks (Federal Reserve).
The most misunderstood part is ownership. The popular claim is that the Fed is "privately owned" by secret banks. The reality is more particular. The Fed states flatly that it "is not owned by anyone" (Federal Reserve). Commercial banks that are members are legally required to hold stock in their regional Reserve Bank, but that stock is nothing like ordinary shares: by statute it "shall not be transferred or hypothecated," meaning it cannot be sold, traded, or pledged (Federal Reserve, Section 5). Member banks receive a statutory dividend on it, but the system is directed by the presidentially-appointed, Senate-confirmed Board, and after paying its expenses the Fed historically turns its earnings over to the Treasury (Federal Reserve). One honest update on that last point: since September 2022, higher interest costs have pushed the Fed's earnings negative, so those payments to the Treasury have stopped for now, and the Fed is running a large accounting deficit it must work off before they resume (Federal Reserve). So the accurate picture is a government-directed system with an unusual, non-tradable member-bank stock, not a secret private company.
The fair criticism
Now the part that is true, documented, and worth taking seriously. The right words for it are conflicts of interest, the revolving door, and regulatory capture, not, as is sometimes claimed, "nepotism," for which there is no evidence.
The revolving door is real and lucrative. After Janet Yellen's term as Fed chair ended, and before she became Treasury Secretary, she earned roughly $7.2 million in speaking fees over two years, including about $950,000 from Citigroup and $810,000 from the hedge fund Citadel (Forbes; Slate). Her predecessor Ben Bernanke was paid at least $250,000 for his very first speech after leaving the Fed, more than his entire annual salary as chairman had been, and then took advisory roles with Citadel and the bond manager PIMCO (CNBC). Alan Greenspan did the same before them, advising PIMCO, Deutsche Bank, and a hedge fund after leaving (NBC News). The pattern, three consecutive Fed chairs cashing in with the firms they had regulated, is exactly what "revolving door" describes.
Then there is the 2021 trading scandal, which is not an allegation but a documented event. Two regional Fed presidents, Robert Kaplan of Dallas and Eric Rosengren of Boston, resigned on the same day in September 2021 after disclosures that they had actively traded securities during 2020, while the Fed was making enormous market interventions; Kaplan had made trades worth a million dollars or more (NPR). Vice Chair Richard Clarida also drew scrutiny for moving a large sum into stock funds a day before the chairman signaled action, and he resigned early (Banking Dive). The Fed's own inspector general later found no laws were broken, but was pointedly critical, saying Kaplan's trades created an "appearance of acting on confidential" policy information (CNBC). Technically legal, but not exonerated. And a 2011 GAO report documented the deeper governance problem: the regional Fed banks' boards include directors elected by the very banks the Fed supervises, which it found creates "an appearance of a conflict of interest," most vividly when JPMorgan's chief executive sat on the New York Fed's board during the financial crisis while his bank received Fed support (GAO). That is a real critique, and it does not require any conspiracy to be damning.
Myth one: Kennedy's "greenbacks"
Now the fiction. The most viral anti-Fed story is that President Kennedy tried to destroy the Federal Reserve by issuing debt-free money, through Executive Order 11110 in June 1963, and that this got him assassinated. It is false, and the actual document is almost boringly technical.
Executive Order 11110 did not create money, mention the Federal Reserve, or attack it. It amended an earlier order to delegate to the Treasury Secretary a power the President already had, dating to 1933, to issue silver certificates against silver the Treasury held (The American Presidency Project). The Congressional Research Service is explicit that it "did not create any new authority for the Treasury to issue notes; it only affected who could give the order" (CRS via FamGuardian). Worse for the myth, it was signed the same day as a law repealing the Silver Purchase Act, and the whole purpose was to phase silver certificates out, not expand them, replacing them with Federal Reserve notes; as the CRS puts it, "if anything, E.O. 11110 enhanced Federal Reserve power and did not in any way reduce it" (CRS via FamGuardian). Treasury stopped issuing silver certificates entirely the next year, and the order was formally revoked as obsolete by Ronald Reagan in 1987. The real debt-free "greenbacks," incidentally, were something else entirely: the United States Notes that Lincoln's government issued to finance the Civil War under the Legal Tender Act of 1862 (History.com). PolitiFact rated the claim that Kennedy planned to end the Fed false, noting that Kennedy himself had said in 1960 that he did "not advocate any changes in the constitution of the Federal Reserve System" (PolitiFact).
Myth two: Wilson's "regret"
The second myth is a quotation, endlessly shared, in which Woodrow Wilson supposedly confesses on reflection that signing the Federal Reserve Act ruined the country: "I am a most unhappy man. I have unwittingly ruined my country." He never said it. The Woodrow Wilson Presidential Library lists it among "spurious quotes" and notes that the "I have unwittingly ruined my country" line is "impossible to find in Wilson's writing" (Woodrow Wilson Presidential Library).
What actually happened is that someone stitched the fake together from real but unrelated passages in Wilson's 1913 book "The New Freedom." The genuine line, "A great industrial nation is controlled by its system of credit," comes from a chapter attacking the private Wall Street "money trust," and the doctored version quietly drops the word "privately" to make it sound like an attack on a government central bank (Cooperative Individualism). The decisive problem is the calendar: "The New Freedom" collects Wilson's 1912 campaign speeches, written before the Federal Reserve Act even existed, so it cannot possibly be regret over signing it. Wilson's biographer John Cooper Jr. put it flatly: "this is not a statement of regret for having created the Federal Reserve. Wilson never had any regrets for having done that. It was an accomplishment in which he took great pride" (Salon).
And Andrew Jackson
One more correction rounds it out, because it comes up constantly: the claim that Andrew Jackson "abolished the Fed." He could not have. Jackson was president from 1829 to 1837 and died in 1845, roughly 68 years before the Federal Reserve was created (U.S. Senate). What Jackson actually warred against was a different institution, the Second Bank of the United States, a predecessor central bank chartered in 1816 and run by Nicholas Biddle. Jackson vetoed its recharter in 1832, declaring that "the rich and powerful too often bend the acts of government to their selfish purposes," pulled the federal deposits out of it in 1833, and let its charter expire in 1836 (Miller Center; Britannica). It is a real and dramatic episode in American history. It just is not about the Federal Reserve, which would not exist for another three generations.
That is the whole shape of the thing. The Federal Reserve has genuine, documented problems worth arguing about: a revolving door that pays its former officials millions, a trading scandal that forced out two of its bank presidents, and a governance structure that seats the regulated on the regulator's boards. Those criticisms are strong enough on their own that they need no embellishment. The tragedy of the myths, the Kennedy assassination story and the Wilson deathbed regret, is not only that they are false, but that they crowd out the true criticisms and let defenders dismiss the whole subject as conspiracy. The honest position is the hardest one to caricature: take the documented failures seriously, and leave the fiction on the shelf.
Related reading
- What the Rothschilds Actually Did With Money: the same separation of documented fact from financial myth.
- One Wildcatter, Three Families: where Ray Hunt, who chaired the Dallas Fed, fits into an oil dynasty.
- The Archetype: the private fortune whose family bank was Chase, a Fed member bank.
- The Working Ledgers: the market and the money the Fed sits atop.
Fact-check notes and sources
- Structure and ownership (the Federal Reserve Act signed by Wilson on December 23, 1913; the Board of Governors as a federal agency accountable to Congress, the FOMC, and the twelve Reserve Banks; the Fed's statement that it "is not owned by anyone," the non-transferable member-bank stock under Section 5, the statutory dividend, and the historical remittance of earnings to the Treasury, now suspended since 2022 because of negative earnings): U.S. Senate, Federal Reserve on who we are, Federal Reserve on ownership, Federal Reserve Section 5, Federal Reserve on funding, and Federal Reserve on the deferred asset.
- The documented critiques (Janet Yellen's roughly $7.2 million in speaking fees including from Citigroup and Citadel; Ben Bernanke's $250,000-plus first post-Fed speech and his Citadel and PIMCO roles; Alan Greenspan's post-Fed advisory roles; the September 2021 resignations of Robert Kaplan and Eric Rosengren over 2020 trading, Richard Clarida's trades and early resignation, and the inspector general's finding of no legal violation but an "appearance" problem; and the 2011 GAO report on regional-bank director conflicts, including the JPMorgan example): Forbes, Slate, CNBC on Bernanke, NBC News on Greenspan, NPR, Banking Dive, CNBC on the OIG report, and GAO. The accurate terms are conflicts of interest, revolving door, and regulatory capture; there is no documented "nepotism" in the family-hiring sense.
- The Jackson history (Jackson's presidency from 1829 to 1837 and death in 1845, decades before the 1913 Fed; his war on the Second Bank of the United States chartered in 1816 and run by Nicholas Biddle, the 1832 veto with its quotation, the 1833 removal of deposits, and the 1836 charter expiry): U.S. Senate, Miller Center, and Britannica.
- Myth one, the Kennedy Executive Order 11110 claim (that it delegated to the Treasury Secretary the pre-existing authority to issue silver certificates rather than creating debt-free money, that it never mentioned the Fed, that its purpose was to phase silver certificates out and that it "enhanced Federal Reserve power," per the Congressional Research Service; that the real greenbacks were Lincoln's Civil War United States Notes; and PolitiFact's false rating with Kennedy's own 1960 statement): The American Presidency Project, Congressional Research Service via FamGuardian, History.com on the Legal Tender Act, and PolitiFact.
- Myth two, the Woodrow Wilson "regret" quote (the Woodrow Wilson Presidential Library listing it as spurious and the "ruined my country" line as impossible to find; the fabrication being spliced from unrelated 1913 passages in "The New Freedom" attacking the private money trust, with "privately" dropped; the chronological impossibility since the book collects pre-Fed 1912 speeches; and biographer John Cooper Jr.'s statement that Wilson took pride in the Fed): Woodrow Wilson Presidential Library, Cooperative Individualism, and Salon.
This post is informational and historical, not financial or political advice. It gives the documented criticisms their weight and debunks two widely circulated myths with authoritative sources. All figures and quotations are reproduced from the cited public record, with contested wording flagged. Individuals and institutions are discussed as nominative fair use, with no affiliation implied.
