Who do the federal reserve banks do business with?

Mostly with other banks and lending institutions. The Fed sets the rate of exchange (fees) for banks to loan to each other and to borrow from the Federal Reserve Banks(discount rate ) .Private banks must keep some funds in reserve in the Federal Reserve Banks.

The fed does most of its business with the United States Government. When the government needs money, George W. Bush gets on the green phone and calls Ben Bernanke.

"Hello? Ben Bernanke speaking."

"Hey Benny, how ya doin, G Dub here."

"Oh, Hello Georgie, and how is you Father today?"

"He's great Benny, Him and Cheney are playing Monopoly in Lincolns bed room."

"Very nice, what can I do for you Georgie?"

"Benny, I wanna buy me some Tanks, bullits, jet fighters and a new pair of cowboy boots."

"OK Georgie, will a Trillion do you for today?"

" A Trillon won't cover it all Benny."

"Now Georgie Boy, you know what your father said...ONE TRILLION a day is all you get!"

"Oh Shoot, OK, A trillion then."

"All right Georgie, I'll just type it in on our computerized acount for you."

"No Benny, I need cash...today.

"Allright Georgie, I'll call the Treasury and have them print it up for you. Should have it ready in half an hour."

"Thank you Benny. You are the best friend a government could ever have."

"Don't mention it Georgie. By the way, I'm cutting the interest again today so you will get an even better rate."

"Oh Benny, I don't give a big rats patootie about that, just get on them good ole boys down at the IRS and make them collect that federal income tax better! HA HA HA!"

" HA HA HA! I'll do that Georgie Boy!"