The Fed (Part
2 of 2)
is the Federal Reserve? We routinely hear from Chairman Alan
Greenspan, but does he unilaterally make the decisions that
jerk our lives around or are there other individuals that
provide input to Federal Reserve policy? The Federal Reserve
is a federal system, composed basically of a central, government
agency, the Board of Governors based in Washington D.C., and
twelve regional Federal Reserve Banks, located in major cities
throughout the nation. After serving a full term a board
member can't be reappointed unless they begin by filling a
partial term or leave prior to serving a full term. The President
of the U.S. selects the Chairman and Vice-Chairman for a 4-year
term. The Board of Governors is supported by a Washington
staff of 1,700 people.
Nationwide there is a network of twelve
Federal Reserve Banks and twenty-five branch banks. Each Bank
is the primary bank in each of twelve Federal Reserve Districts.
Each Reserve District is designated by a number and a letter
and is run by a nine-member board of directors. The district
banks operate a nationwide payment system and distribute the
nation's coin and currency.
The Federal Open Market Committee
(FOMC) is made up of the seven Board of Governors members
and the presidents of four of the twelve regional Federal
Reserve Banks, who serve one-year terms on a rotating basis.
The twelfth member of the FOMC is the president of the Federal
Reserve Bank of New York who serves on a continuous basis.
FOMC activities probably affect our lives more than any other
component of the Federal Reserve System. The FOMC oversees
open market operations, which is the main tool used by the
Federal Reserve to influence the growth of the monetary and