Most federal agencies live and die by an annual appropriation from Congress. The Federal Reserve does not. It occupies no line in the federal budget, asks Congress for no money, and in an ordinary year hands the Treasury tens of billions of dollars it was never given in the first place. That inverted arrangement, a government institution that pays for itself and then sends its surplus back to the government, sits underneath everything about how the twelve regional Reserve Banks are built, staffed, and paid. It also explains a quieter fact of the last three years: the Fed has been sending the Treasury very little.
The map: twelve banks and twenty-four branches
The system is built around twelve regional Reserve Banks, located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco (Board of Governors). Each district is a slice of the country rather than a single state, a map drawn generations ago when the population and the banking business sat much further east than they do now. That is why there are two Reserve Banks in Missouri, St. Louis and Kansas City, and only one west of the Rockies, San Francisco.
Below the twelve head offices sit 24 branches (List of Federal Reserve branches). The distribution is lopsided: Atlanta runs five branches and San Francisco four, while St. Louis, Kansas City, and Dallas run three apiece, and Boston, New York, and Philadelphia run no active branch at all. The Buffalo branch of the New York Fed closed in 2008, and the network has not grown since.
The reach extends past the mainland. The New York Reserve Bank serves Puerto Rico and the U.S. Virgin Islands, and the San Francisco Bank covers American Samoa, Guam, and the Northern Mariana Islands, with its Seattle branch serving Alaska and the head office serving Hawaii (Board of Governors). One district, in other words, stretches across most of the Pacific.
Who "owns" a Reserve Bank
This is where public understanding tends to break down. Each Reserve Bank is separately incorporated, with its own board of directors, and the commercial banks that are members of the system are required by law to hold stock in their district Bank (Board of Governors). At a glance that looks like private ownership of the central bank, and it is the seed of a lot of confusion.
The Fed's own answer is blunt. Holding this stock, it says, "is quite different from owning stock in a private company." The stock cannot be sold or traded, it carries no control over policy, and the system "is not owned by anyone" (Board of Governors). What the stock does buy is a fixed dividend, and even that was trimmed a decade ago. Under a 2016 final rule implementing the FAST Act, member banks with $10 billion or less in assets keep the traditional 6 percent dividend, while banks above $10 billion receive the lesser of 6 percent or the most recent 10-year Treasury auction rate, effective January 1, 2017 (Board of Governors). The Government Accountability Office later reported that the change modified the dividend formula for roughly 85 larger member banks (GAO-17-243). Congress simply legislated the dividend down, and the member banks holding the stock had no vote in the matter, which is not how ownership of a private company usually works.
Whatever the stock is, it is not a lever on interest rates. Monetary policy is set by the Federal Open Market Committee and the Board of Governors, not by the member banks that hold the shares (Board of Governors).
How the Fed pays for itself
The Federal Reserve is not funded by congressional appropriations. Its income comes mainly from interest on the U.S. government securities it holds, plus smaller amounts from foreign-currency holdings, loans, and fees for the priced services it provides to banks. The Fed describes itself as "directly accountable to the Congress" while remaining self-funded (Board of Governors). The independence people argue about is downstream of this money question: an institution that does not have to route a budget request through Congress is much harder for Congress to squeeze.
The other half of the deal is the return trip. By law, the Reserve Banks transfer their net earnings to the Treasury after covering operating expenses, the member-bank dividend, and a limited surplus (Board of Governors). For most of the past century that remittance was a reliable, sizeable check written to the taxpayer. Then the arithmetic reversed.
The deferred asset: when the Fed stops sending checks
Here is the wrinkle almost nobody outside the building was watching. During 2022 the Reserve Banks transferred $76.0 billion to the Treasury, but they suspended their weekly remittances in September of that year and finished 2022 carrying a deferred asset of $18.8 billion (Board of Governors).
The "deferred asset" is an accounting device, and it is worth understanding because it is doing a lot of work. When the Fed raised interest rates to fight inflation, it began paying more in interest on bank reserves and on reverse repurchase agreements than it earned on the older, lower-yielding securities sitting in its portfolio. Net income went negative. Rather than book a loss the way a private company would, the Fed records a deferred asset, which is simply the running total of earnings it must make back before it resumes sending money to the Treasury (St. Louis Fed). By November 8, 2023, that figure had reached about $116.9 billion.
It kept climbing. As of September 24, 2025, the Fed reported a consolidated deferred asset of $242 billion, with consolidated net income negative on net since March 2025 and only sporadic weekly remittances, made in the odd week when one or two individual Reserve Banks turned positive (Board of Governors). It would be wrong to say the Fed has sent the Treasury nothing: individual Banks that periodically ran a surplus still passed along $3.5 billion in 2024 and $670 million in 2023 (2024 Annual Report). But against a history of tens of billions a year, that is close to a rounding error. When the deferred asset reaches zero and normal remittances resume depends entirely on the path of policy rates, and the Fed has not tied it to a date.
What the Reserve Banks pay their people
The system is a large employer. Across the whole Federal Reserve, 2024 headcount ran to 24,179 full-time-equivalent positions: 3,176 at the Board of Governors, 140 at its Office of Inspector General, 20,840 across the twelve Reserve Banks, and 23 in the currency-printing function, against total system net operating expenses of $6,837.5 million (2024 Annual Report, System Budgets). The Reserve Banks themselves counted 20,968 people on the payroll at the end of 2024, including 18,863 full-time staff and 1,834 officers besides the presidents, with total Reserve Bank salaries of roughly $2.99 billion (2024 Annual Report). The work is broad: the Fed hires economists and research assistants, bank examiners and financial analysts, attorneys, IT professionals, law enforcement officers, and operations and administrative staff (Board of Governors).
The president salaries are where the structure gets genuinely surprising. For 2024, the New York president was paid the most at $568,100, followed by San Francisco at $550,300, Boston at $496,700, Minneapolis at $496,000, Philadelphia at $495,900, Chicago at $478,400, Atlanta at $476,000, Dallas at $473,300, Richmond at $462,500, Cleveland at $447,500, St. Louis at $445,000, and Kansas City at the bottom at $444,900, for a combined $5,834,600 (2024 Annual Report). The pecking order is old: back in 2015 New York again led at $466,500 and San Francisco came second at $422,900, while St. Louis was the lowest paid at $339,700 (Annual Report 2015).
Now the punchline. Reserve Bank presidents are employees of their district Banks, not of the federal government, so they are not on the General Schedule or the Executive Schedule that caps most senior federal pay. The people who actually chair the policy machinery at the top, the Chair and the other Governors, are federal employees, and their pay is fixed by statute. The Chair is placed at Executive Schedule Level I and the other Governors at Level II (5 U.S.C. 5313, via Wikipedia). The Level I rate was $246,400 in 2024 and Level II was $221,900. In practice the Governors have been paid even less than those ceilings because of a long-running freeze on top federal salaries. Asked about his own pay in 2023, Chair Jerome Powell answered, "It's around $190,000, I believe," and payroll filings reviewed by the press put the figure closer to $203,000 (Fortune). Reporting on the exact current line items is inconsistent, but the direction is not in doubt: the person chairing the Federal Reserve earns roughly $200,000, while every one of the twelve regional presidents who operate under that policy structure earns more than twice as much.
The bottom line
The twelve Reserve Banks are a genuinely odd hybrid. They are privately incorporated and hold stock owned by member banks, yet no one owns the system and the shareholders have no say over policy. They pay for themselves out of interest income and, in good years, send their profit to the Treasury, yet they answer to Congress. Their presidents out-earn the Chair who sits at the center of the policy structure, because they are technically not federal employees at all. And the reliable annual check to the taxpayer, long treated as a fixed feature of the arrangement, has been suspended in all but name since 2022 while the Fed works off a deferred asset that stood at $242 billion in late 2025. None of this is hidden. It is all in the annual reports and the press releases. It is just structured in a way that almost nobody bothers to read.
Related reading
- Federal Reserve facts and myths: the documented criticisms of the Fed kept separate from the debunked myths.
- Trust funds versus sovereign wealth: how other large public money pools are structured and invested.
- Who borrows from the Social Security trust: another public fund with a funding structure that surprises people.
- The working ledgers: the market and the money underneath the institutions.
Fact-check notes and sources
- Structure, branches, and territories (twelve Banks and their cities; 24 branches with the Buffalo branch closed in 2008 and no active branch at Boston, New York, or Philadelphia; the territory service assignments): Board of Governors and List of Federal Reserve branches.
- Ownership, member-bank stock, and dividends (separately incorporated Banks, the statutory stock requirement, the "not owned by anyone" language, the FAST Act dividend formula effective January 1, 2017, and the roughly 85 affected banks): Board of Governors FAQ, Board of Governors press release, and GAO-17-243.
- Self-funding and remittances (no congressional appropriations, the income sources, accountability to Congress, and the statutory transfer of net earnings): Board of Governors FAQ and Board of Governors FAQ.
- The deferred asset ($76.0 billion transferred in 2022, remittances suspended September 2022, $18.8 billion deferred asset at year-end 2022; the mechanism and the roughly $116.9 billion figure on November 8, 2023; $242 billion as of September 24, 2025, with net income negative on net since March 2025): Board of Governors press release, St. Louis Fed, and Board of Governors balance-sheet update. The $3.5 billion (2024) and $670 million (2023) still transferred are from the 2024 Annual Report.
- Employment and pay (24,179 system full-time-equivalent staff and the $6,837.5 million operating expense from the budget tables; 20,968 Reserve Bank headcount, 1,834 officers, and roughly $2.99 billion in salaries; the 2024 president salaries totalling $5,834,600 and the 2015 comparison; the job categories): 2024 Annual Report, System Budgets, 2024 Annual Report, Annual Report 2015, and Board of Governors careers. The Cleveland and Richmond figures here reflect Table G.12 as filed, $447,500 and $462,500 respectively.
- Chair and Governor pay (Executive Schedule Level I and Level II by statute, $246,400 and $221,900 in 2024; Powell's "around $190,000" quote and the roughly $203,000 payroll figure): 5 U.S.C. 5313, via Wikipedia and Fortune. The exact current Chair and Governor line-item salaries are reported inconsistently and are given here only as an approximate $200,000, well below the statutory Level I ceiling because of the federal pay freeze.
This post is informational and educational, not tax, legal, or investment advice. Figures are reproduced from the cited Federal Reserve reports, press releases, government audits, and news coverage, with contested or approximate figures flagged as such. The Federal Reserve and the other organizations named here are discussed as a matter of public record under nominative fair use, with no affiliation or endorsement implied.
