my part of prsentation

7/30/2019 My Part of Prsentation

1/5

THE FEDERAL RESERVE SYSTEM PAGE 1

C O M

M E R C I A L B A N K I N G

2. STRUCTURE

The Federal Reserve System has both private and public components, and can make decisions

without the permission of Congress or the President of the U.S. The System does not requirepublic funding, and derives its authority and purpose from theFederal Reserve Actpassed by

Congress in 1913. The two main aspects of the Federal Reserve System are the Federal Open

Market Committee and regional Federal Reserve Banks located throughout the country.

2.1 BOARD OF GOVERNORS

The seven-member Board of Governors is a federal agency and is the main governing body of

the Federal Reserve System. It is charged with overseeing the 12 District Reserve Banks and

setting national monetary policy. It also supervises and regulates the U.S. banking system in

general. Governors are appointed by the President of the United States and confirmed by the

Senate for staggered 14-year terms. The Board is required to make an annual report of

operations to the Speaker of the U.S. House of Representatives.

The Chairman and Vice Chairman of the Board of Governors are appointed by the President

from among the sitting Governors. They both serve a four year term and they can be

renominated as many times as the President chooses, until their terms on the Board of

Governors expire, butregardless of whether either is reconfirmed for their chairmanship or

vice chairmanshiphe or she is free to complete their term on the Board of Governors.

2.1.1 LIST OF MEMBERS OF THE BOARD OF GOVERNORS

The current members of the Board of Governors are as follows:

COMMISSIONER ENTERED OFFICE TERM EXPIRES

Ben Bernanke

(Chairman)February 1, 2006

January 31, 2020

January 31, 2014 (as Chairman)

Janet Yellen

(Vice Chairman)October 4, 2010

January 31, 2024

October 4, 2014 (as Vice Chairman)
http://en.wikipedia.org/wiki/Federal_Reserve_Acthttp://en.wikipedia.org/wiki/Federal_Reserve_Acthttp://en.wikipedia.org/wiki/Federal_Reserve_Acthttp://en.wikipedia.org/wiki/President_of_the_United_Stateshttp://en.wikipedia.org/wiki/United_States_Senatehttp://en.wikipedia.org/wiki/President_of_the_United_Stateshttp://en.wikipedia.org/wiki/President_of_the_United_Stateshttp://en.wikipedia.org/wiki/United_States_Senatehttp://en.wikipedia.org/wiki/President_of_the_United_Stateshttp://en.wikipedia.org/wiki/Federal_Reserve_Act


2/5


C O M


Elizabeth A. Duke August 5, 2008 January 31, 2012

DANIEL TARULLO January 28, 2009 January 31, 2022

SARAH BLOOM RASKIN October 4, 2010 January 31, 2016

JEROME H.POWELL May 25, 2012 January 31, 2014

JEREMY C.STEIN May 30, 2012 January 31, 2018

2.2 NOMINATIONS AND CONFIRMATIONS

In late December 2011, President Barack Obama nominated Stein, a Harvard University finance

professor and a Democrat, and Powell, formerly ofDillon Read, Bankers Trust and The Carlyle

Group and a Republican. Both candidates also have Treasury Department experience in the

Obama and George H.W. Bush administrations respectively.

The two other Obama nominees in 2011, Yellen and Raskin, were confirmed in September. One

of the vacancies was created in 2011 with the resignation of Kevin Warsh, who took office in

2006 to fill the unexpired term ending January 31, 2018, and resigned his position effectiveMarch 31, 2011.

2.3 FEDERAL OPEN MARKET COMMITTEE

The FOMC is charged under law with overseeing open market operations, the principal tool of

national monetary policy. These operations affect the amount of Federal Reserve balances

available to depository institutions, thereby influencing overall monetary and credit conditions.

The FOMC also directs operations undertaken by the Federal Reserve in foreign exchange

markets.

The FOMC is composed of the seven members of the Board of Governors and five of the twelve

Reserve Bank presidents. The president of the Federal Reserve Bank of New York is a

permanent member; the other after it pays its expenses, the Federal Reserve turns the rest of

its earnings over to the U.S. Treasury. Presidents serve one-year terms on a rotating basis. All

the presidents participate in FOMC discussions, contributing to the committees assessment of
http://en.wikipedia.org/wiki/Barack_Obamahttp://en.wikipedia.org/wiki/Harvard_Universityhttp://en.wikipedia.org/wiki/Democratic_Party_of_the_United_Stateshttp://en.wikipedia.org/wiki/Dillon_Readhttp://en.wikipedia.org/wiki/Bankers_Trusthttp://en.wikipedia.org/wiki/The_Carlyle_Grouphttp://en.wikipedia.org/wiki/The_Carlyle_Grouphttp://en.wikipedia.org/wiki/Republican_Party_of_the_United_Stateshttp://en.wikipedia.org/wiki/United_States_Treasuryhttp://en.wikipedia.org/wiki/George_H.W._Bushhttp://en.wikipedia.org/wiki/George_H.W._Bushhttp://en.wikipedia.org/wiki/United_States_Treasuryhttp://en.wikipedia.org/wiki/Republican_Party_of_the_United_Stateshttp://en.wikipedia.org/wiki/The_Carlyle_Grouphttp://en.wikipedia.org/wiki/The_Carlyle_Grouphttp://en.wikipedia.org/wiki/Bankers_Trusthttp://en.wikipedia.org/wiki/Bankers_Trusthttp://en.wikipedia.org/wiki/Dillon_Readhttp://en.wikipedia.org/wiki/Democratic_Party_of_the_United_Stateshttp://en.wikipedia.org/wiki/Harvard_Universityhttp://en.wikipedia.org/wiki/Barack_Obama


3/5


C O M


the economy and of policy options, but only the five presidents who are committee members

vote on policy decisions.

The FOMC, under law, determines its own internal organization and by tradition elects the

Chairman of the Board of Governors as its chairman and the president of the Federal Reserve

Bank of New York as its vice chairman. Formal meetings typically are held eight times each yearin Washington, D.C. Telephone consultations and other meetings are held when needed.

2.4 ADVISORY COMMITTEES

The Federal Reserve System uses advisory committees in carrying out its varied responsibilities.

Three of these committees advise the Board of Governors directly:

Federal Advisory Council. This council, which is composed of twelverepresentatives of the banking industry, consults with and advises the Board on all matters

within the Boards jurisdiction. It ordinarily meets four times a year, as required by the Federal

Reserve Act. These meetings are held in Washington, D.C., customarily on the first Friday of

February, May, September, and December, although occasionally the meetings are set for

different times to suit the convenience of either the council or the Board. Annually, each

Reserve Bank chooses one person to represent its District on the Federal Advisory Committee,

and members customarily serve three one-year terms and elect their own officers.

Consumer Advisory Council. This council, established in 1976, advises theBoard on the exercise of its responsibilities under the Consumer Credit Protection Act and on

other matters in the area of consumer financial services. The councils membership represents

the interests of consumers, communities, and the financial services industry. Members areappointed by the Board of Governors and serve staggered three-year terms. The council meets

three times a year in Washington, D.C., and the meetings are open to the public.

Thrift Institutions Advisory Council. After the passage of theDepository Institutions Deregulation and Monetary Control Act of 1980, which extended to

thrift institutions the Federal Reserves reserve requirements and access to the discount

window, the Board of Governors established this council to obtain information and views on

the special needs and problems of thrift institutions. Unlike the Federal Advisory Council and

the Consumer Advisory Council, the Thrift Institutions Advisory Council is not a statutorily

mandated body, but it performs a comparable function in providing first-hand advice fromrepresentatives of institutions that have an important relationship with the Federal Reserve.

The council meets with the Board in Washington, D.C., three times a year. The members are

representatives from savings and loan institutions, mutual savings banks, and credit unions.

Members are appointed by the Board of Governors and generally serve for two years.


4/5


C O M


The Federal Reserve Banks also use advisory committees. Of these advisory committees,

perhaps the most important are the committees (one for each Reserve Bank) that advise the

Banks on matters of agriculture, small business, and labour. Biannually, the Board solicits the

views of each of these committees by mail.

2.5 LEGAL STATUS

The law clearly states and charges Congress with this responsibility. The law does not allow

congress to discharge or outsource its monetary duties. This is crystal clear. The Federal

Government has no business, by law, for bailing out banks, regulating interest rates, addressing

economic panics, or regulating the banking industry. These issues belong to the states

constitutionally and ultimately the individual financial institutions.

The Federal Government has grown too powerful because our politicians ignore law and make their

own rules. As a result we are not protected by the law and are subject to the fallout created by self-

serving political aspirations. The Federal Reserve is and has been a failure from day one. Not onlydoes it not work, but the Federal Reserve has been a political focal point for generating regulations

and political favours.

The Federal Reserve should be dissolved and all of the supporting players should be prosecuted for

failing to uphold their oath of protecting and defending the Constitution.

2.6 MEMBER BANKS

The nations commercial banks can be divided into three types according to which

governmental body charters them and whether or not they are members of the FederalReserve System. Those chartered by the federal government (through the Office of the

Comptroller of the Currency in the Department of the Treasury) are national banks; by law, they

are members of the Federal Reserve System. Banks chartered by the states are divided into

those that are members of the Federal Reserve System (state member banks) and those that

are not (state non-member banks). State banks are not required to join the Federal Reserve

System, but they may elect to become members if they meet the standards set by the Board of

Governors. As of March 2004, of the nations approximately 7,700 commercial banks

approximately 2,900 were members of the Federal Reserve Systemapproximately 2,000

national banks and 900 state banks.

Member banks must subscribe to stock in their regional Federal Reserve Bank in an amount

equal to 6 percent of their capital and surplus, half of which must be paid in while the other half

is subject to call by the Board of Governors. The holding of this stock, however, does not carry

with it the control and financial interest conveyed to holders of common stock in for-profit

organizations. It is merely a legal obligation of Federal Reserve membership, and the stock may

not be sold or pledged as collateral for loans. Member banks receive a 6 percent dividend


5/5


C O M


annually on their stock, as specified by law, and vote for the Class A and Class B directors of the

Reserve Bank. Stock in Federal Reserve Banks is not available for purchase by individuals or

entities other than member banks.

my part of prsentation

Documents