Editing Federal Reserve Bank (section)

==Finances==
The Federal Reserve Banks fund their own operations, primarily by distributing the earnings from the System Open Market Account. Expenses and dividends paid are typically a small fraction of a Federal Reserve Bank's revenue each year.<ref>Annual reports</ref> The banks may retain part of their earnings in their own surplus funds that are limited to $7.5&nbsp;billion, system-wide. The rest must be transferred via the Board of Governors to the Secretary of the Treasury, who then deposits it to the Treasury's general fund.<ref>{{usc|12|289}}</ref><ref>See bank financial statements, e.g. [https://www.federalreserve.gov/aboutthefed/files/combinedfinstmt2018.pdf 2018 Combined Financial Statements] (Operating Expenses: Earnings remittances to the Treasury), and Treasury financial reports, e.g. [https://home.treasury.gov/system/files/236/AFR_Full%20111518_clean_508.pdf 2018 Agency Financial Report] (Sources of Custodial Revenue: Deposit of Earnings, Federal Reserve System)</ref> When a Reserve Bank's earnings are insufficient to cover its expenses and dividends, it introduces a deferred asset on its books to be realized from future earnings.<ref>{{cite report|last1=Carpenter|first1=Seth B.|last2=Ihrig|first2=Jane E.|last3=Klee|first3=Elizabeth C.|last4=Quinn|first4=Danel W.|last5=Boote|first5=Alexander H.|title=The Federal Reserve’s Balance Sheet and Earnings: A primer and projections|date=January 2013|url=https://www.federalreserve.gov/pubs/feds/2013/201301/revision/201301pap.pdf|access-date=2023-01-24}}</ref>

The Reserve Banks were historically capitalized through deposits of gold, and in 1933 all privately held monetary gold was transferred to them under [[Executive Order 6102]]. This gold was in turn transferred to the Treasury under the [[Gold Reserve Act of 1934]] in exchange for [[Gold certificate (United States)|gold certificate]]s that may not be redeemed under current law. The Reserve Banks continue to report these certificates as assets, but they do not represent direct gold ownership and the Board of Governors has stated that "the Federal Reserve does not own gold."<ref>{{cite web|title=Does the Federal Reserve own or hold gold?|website=Board of Governors of the Federal Reserve System|url=https://www.federalreserve.gov/faqs/does-the-federal-reserve-own-or-hold-gold.htm|access-date=2019-02-19}}</ref>

Although the Reserve Banks operate as distinct financial entities, they participate each April in an interdistrict settlement process that has three purposes: settling the payment balances that the Reserve Banks owe each other; allocating ownership of the SOMA portfolio; and establishing uniform gold certificate backing for Federal Reserve Notes. This process connects the Reserve Banks' different functions – monetary policy, payment clearing and currency issue – as an integrated system.<ref name="wolman">{{cite journal|last=Wolman|first=Alexander L.|title=Federal Reserve Interdistrict Settlement|journal=Economic Quarterly|publisher=Federal Reserve Bank of Richmond|volume=99|number=2|year=2013|url=https://www.richmondfed.org/publications/research/economic_quarterly/2013/q2/wolman|access-date=2022-11-13}}</ref>

The Federal Reserve Banks conduct ongoing internal [[Financial audit|audit]]s of their operations to ensure that their accounts are accurate and comply with the Federal Reserve System's accounting principles. The banks are also subject to two types of external auditing. Since 1978 the [[Government Accountability Office]] (GAO) has conducted regular audits of the banks' operations. The GAO audits are reported to the public, but they may not review a bank's monetary policy decisions or disclose them to the public.<ref>{{usc|31|714}}</ref> Since 1999 each bank has also been required to submit to an annual audit by an external accounting firm,<ref>{{usc|12|269b}}</ref> which produces a confidential report to the bank and a summary statement for the bank's annual report. Some members of Congress continue to advocate a more public and intrusive GAO audit of the Federal Reserve System,<ref>{{cite news|url=https://www.forbes.com/2009/07/21/federal-reserve-congress-business-washington-bernanke.html|access-date=2011-11-23|title=Bernanke Fights Audit Threat To The Fed|author=Zumbrun, Joshua|date=2009-07-21|work=Forbes}}</ref> but Federal Reserve representatives support the existing restrictions to prevent political influence over long-range economic decisions.<ref>{{cite web|url=http://www.ny.frb.org/aboutthefed/fedpoint/fed35.html|access-date=2011-11-23|title=How the Federal Reserve is Audited|date=April 2008|work=Federal Reserve Bank of New York}}</ref><ref>{{cite web|first=Jerome H.|last=Powell|date=February 9, 2015|title='Audit the Fed' and Other Proposals|website=Board of Governors of the Federal Reserve System|url=https://www.federalreserve.gov/newsevents/speech/powell20150209a.htm|access-date=2019-08-25}}</ref>