Federal Reserve

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The Federal Reserve (the Fed) is the central banking system of the U.S. It was established by an Act of Congress in 1913. The Fed is composed of the Federal Reserve Board and 12 Federal Reserve Banks. Its primary purpose is to regulate the flow of money and credit in the country through the implementation of monetary policy. Even though the Fed is accountable to Congress and its goals are set by law, its conduct of monetary policy is insulated from day-to-day political pressures.

1 Federal Reserve Board
2 Responsibilities
3 Meetings
4 References

Federal Reserve Board

As of October of 2007, members of the Federal Reserve Board were Chairman Ben Bernanke, Vice Chairman Donald Kohn, member Kevin Warsh, member Randall Kroszner and member Frederic Mishkin.

The seven members of the Board of Governors are appointed by the U.S. President and confirmed by the Senate to serve 14-year terms of office. Members may serve only one full term, but a member who has been appointed to complete an unexpired term may be reappointed to a full term. The President designates, and the Senate confirms, two members of the Board to be Chairman and Vice Chairman, for four-year terms.

The seven Board members constitute a majority of the 12-member Federal Open Market Committee (FOMC), the group that makes the key decisions affecting the cost and availability of money and credit in the economy. The other five members of the FOMC are Reserve Bank presidents, one of whom is the president of the Federal Reserve Bank of New York.

Responsibilities

In addition to monetary policy responsibilities, the Federal Reserve Board has regulatory and supervisory responsibilities over banks that are members of the System, bank holding companies, international banking facilities in the United States, Edge Act and agreement corporations, foreign activities of member banks, and the U.S. activities of foreign-owned banks. The Board also sets margin requirements, which limit the use of credit for purchasing or carrying securities.

Furthermore, the Board plays a key role in assuring the smooth functioning and continued development of the nation's extensive payments system.

Another area of Board responsibility is the development and administration of regulations that implement major federal laws governing consumer credit such as the Truth in Lending Act, the Equal Credit Opportunity Act, the Home Mortgage Disclosure Act and the Truth in Savings Act.

Meetings

The Board usually meets several times a week. Meetings are conducted in compliance with the Government in the Sunshine Act, and therefore many meetings are open to the public. If the Board convenes to consider confidential financial information, however, the sessions are closed to public observation.