From its founding in 1913, secrecy and inside deals have been part of the way the Fed works.
Part of the public relations game played by the chairman of the Fed is designed to suggest that the Fed is an essential part of our system, one we cannot do without. In fact, the Fed came about during a priod of our nation's history called the Progressive Era, when the income tax and many new government institutions were created. It was a time in which business in general became infatuated with the idea of forming cartels as a way protecting profits and socializing losses.
The largest banks were no exception. They were very unhappy that there was not national lender of last restort that they could depend on to bail them out in times of crisis. With no bailout mechanism in place, they had to sink or swim on their own merits. (p. 13)