Banks Rule the World, but Who Rules the Banks? (I)

Strategic Culture
by Valentin KATASONOV

These days, it is already a truism that the hegemony of the US is based on the Federal Reserve System’s (FRS) printing press. It is also more or less clear that the shareholders of the FRS are major international banks. These include not just US (Wall Street) banks, but also European banks (London City banks and several in continental Europe). 

During the 2007-2009 global financial crisis, the FRS quietly gave out more than $16 trillion worth of credit (virtually interest free) to various banks. The owners of the money gave out the credit to themselves, that is to the main shareholder banks of the Federal Reserve. Under strong pressure from US Congress, a partial audit of the FRS was carried out at the beginning of this decade and the results were published in the summer of 2011. The list of credit recipients is also a list of the FRS’ main shareholders. They are as follows (the amount of credit received is shown in brackets in billions of dollars): Citigroup (2,500); Morgan Staley (2,004); Merrill Lynch (1,949); Bank of America (1,344); Barclays PLC (868); Bear Sterns (853); Goldman Sachs (814); Royal Bank of Scotland (541); JP Morgan (391); Deutsche Bank (354); Credit Swiss (262); UBS (287); Leman Brothers (183); Bank of Scotland (181); and BNP Paribas (175). It is interesting that a number of the recipients of FRS credit are not American, but foreign banks: British (Barclays PLC, Royal Bank of Scotland, Bank of Scotland); Swiss (Credit Swiss, UBS); the German Deutche Bank; and the French BNP Paribas. These banks received nearly $2.5 trillion from the Federal Reserve. We would not be mistaken in assuming that these are the Federal Reserve’s foreign shareholders. 

While the makeup of the Federal Reserve’s main shareholders is more or less clear, however, the same cannot be said of the shareholders of those banks who essentially own the FRS’ printing press. Who exactly are the shareholders of the Federal Reserve’s shareholders? 

To begin with, let us take a good look at the leading US banks. Six banks currently represent the core of the US banking system. The ‘big six’ includes Bank of America, JP Morgan Chase, Morgan Stanley, Goldman Sachs, Wells Fargo, and Citigroup. They occupy the top spots in US bank ratings in terms of indices such as amount of capital, controlled assets, deposits attracted, capitalisation and profit. If we were to rank the banks in terms of assets, then JP Morgan Chase would be in first place ($2,075 billion at the end of 2014), while Wells Fargo is in the lead in terms of capitalisation ($261.7 billion in the autumn of 2014). In terms of this index, incidentally, Wells Fargo came out on top not only in America, but in the world (although in terms of assets, the bank is only fourth in America and does not even figure in the world’s top twenty). 

There is some shareholder information on the official websites of these banks. The bulk of the big six US banks’ capital is in the hands of so-called institutional shareholders – various financial companies. These include banks, which means there is cross shareholding.

At the beginning of 2015, the number of institutional shareholders of each bank were: Bank of America – 1,410; JP Morgan Chase – 1,795; Morgan Stanley – 826; Goldman Sachs – 1,018; Wells Fargo – 1,729; and Citigroup – 1,247. Each of these banks also has a fairly clear group of major investors (shareholders). These are investors (shareholders) with more than one per cent of capital each and there are usually between 10 and 20 such shareholders. It is striking that exactly the same companies and organisations appear in the group of major investors for every bank. Table 1 lists the major institutional investors (shareholders). 

Table 1.

Major institutional shareholders of US banks and their percentage of the share capital of each bank (as of 31 December 2014)

Leading institutional shareholders

Main US banks

Bank of America

JP Morgan


Wells Fargo

Goldman Sachs

Morgan Stanley

Vanguard Group







State Street Corporation







FMR (Fidelity)






Black Rock







Northern Trust






JP Morgan Chase






As well as the institutional investors identified in Table 1, the list of shareholders of the leading US banks also includes the following organisations: Capital World Investors, Massachusetts Financial Services, Price (T. Rowe) Associates Inc., Mitsubishi UFJ Financial Group, Inc., Berkshire Hathaway Inc., Dodge & Cox Inc., Invesco Ltd., Franklin Resources, Inc., The Bank of New York Mellon Corporation and several others. I have only named those organisations that appear as shareholders of at least two of the six leading US banks. 

The institutional shareholders listed in the financial statements of leading American banks are various financial companies and banks. Separate records are maintained with regard to shareholders such as individuals and mutual funds. In a number of Wall Street banks, a substantial proportion of the shares are owned by the employees of these banks. Obviously these are top managers rather than ordinary employees (although ordinary bank workers may also have a symbolic amount of shares). With regard to mutual funds1, many of these fall within the sphere of influence of exactly the same institutional shareholders listed above. 

A list of the largest shareholders of the US bank Goldman Sachs that qualify as mutual funds may be given by way of example (Table 2). 

Table 2.

Largest mutual fund shareholders of Goldman Sachs (as of 31 December 2014)

Name of mutual fund

Percentage of share capital

Dodge & Cox Stock Fund


Vanguard Total Stock Market Index Fund


SPDR Dow Jones Industrial Average ETF


Vanguard 500 Index Fund


Vanguard Institutional Index Fund-Institutional Index Fund


SPDR S&P 500 ETF Trust


Growth Fund Of America Inc


MFS Series Trust I-MFS Value Fund


Select Sector SPDR Fund-Financial


Fundamental Investors Inc



At least three of the funds listed in Table 2 fall within the sphere of influence of the financial corporation Vanguard Group. These are Vanguard Total Stock Market Index Fund, Vanguard 500 Index Fund, and Vanguard Institutional Index Fund-Institutional Index Fund. The Vanguard Group holds 4.9 per cent of the share capital in Goldman Sachs, but the three mutual funds that are part of this financial holding company provide an additional 3.59 per cent. The Vanguard Group’s actual position in Goldman Sachs is therefore determined by a share of 8.49 per cent rather than 4.9 per cent. 

A number of Wall Street banks also have an individual shareholder category. These are usually the banks’ senior executives, both active and retired. The table below contains information on the individual shareholders of Goldman Sachs (Table 3). 

Table 3.

Largest individual shareholders of Goldman Sachs (as of 27 February 2015)


Number of shares












Altogether, the five individuals listed in Table 3 hold more than 5.5 million shares in Goldman Sachs, which amounts to approximately 1.3 per cent of the bank’s total share capital. This is the same amount of shares as an institutional shareholder like Northern Trust. Who are these people? They are senior managers at Goldman Sachs. Lloyd Blankfein, for example, has been the chairman and CEO of Goldman Sachs since 31 May 2006. John S Weinberg has been a vice chairman of Goldman Sachs since around the same time. He is also a member of the management committee and was co-head of the investment banking division (he left the latter post in December 2014). The three other individual shareholders also fall into the category of Goldman Sachs senior management, and they are all current employees of the bank. 

(To be concluded…)

(1) A mutual fund (MF) is a portfolio of shares acquired by professional financiers through investments by many thousands of small investors. By the beginning of the 21st century, there were several thousand mutual funds in operation in the US. By 2000, 164.1 million accounts had been opened under the framework of mutual funds, which is to say nearly two per family.

Strategic Culture