Which of these officers of the federal reserve

Depository institutions are required to meet reserve requirements--that is, to keep a certain amount of cash on hand or in an account at a Reserve Bank based on the total balances in the checking accounts they hold. Depository institutions that have higher balances in their Reserve Bank account than they need to meet reserve requirements may lend to other depository institutions that need those funds to satisfy their own reserve requirements.

This rate influences interest rates, asset prices and wealth, exchange rates, and thereby, aggregate demand in the economy. The FOMC sets a target for the federal funds rate at its meetings and authorizes actions called open market operations to achieve that target. Four advisory councils assist and advise the Board on matters of public policy. Federal Reserve Banks also have their own advisory committees. Perhaps the most important of these are committees that advise the Banks on agricultural, small business, and labor matters.

The Federal Reserve Board solicits the views of each of these committees biannually. Search Submit Search Button. Toggle Dropdown Menu. Search Search Submit Button Submit. Please enable JavaScript if it is disabled in your browser or access the information through the links provided below. A governor who has served a full year term may not be reappointed, but someone who was appointed to complete an unexpired term may be reappointed to a full year term. Once appointed, governors cannot be removed from office for their policy views.

The length of the terms and the staggered appointments process are intended to contribute to the insulation of the Board—and the Federal Reserve System—from day-to-day political pressures to which it might otherwise be subject. If all governors serve full terms, a U. In reality, however, many governors leave before completing their year terms, and recent presidents have made more than one appointment to the Board every two years.

As stipulated in the Banking Act of , one of the seven governors is appointed by the U. This selection must be confirmed by the Senate. The chairman serves as public spokesperson and representative for the Board, manager of the Board's staff, and chairman at Board meetings.

Ben S. Bernanke was sworn in on February 1, , as chairman and a member of the Board of Governors of the Federal Reserve System. History The Board did not always enjoy the political independence that it has today. The first Federal Reserve Board, created by Congress in , consisted of five members. The secretary of the Treasury and the comptroller of the currency had automatic memberships, and the president was responsible for appointing the remaining three members, subject to the approval of the Senate.

Two of the five members were designated governor and vice governor, the chief administrative officers of the Board. The role of chairman at Board meetings was assigned to the secretary of the Treasury. One of the Board's earliest conflicts concerned the strong representation of the Treasury Department on the Board. Congress and the Roosevelt administration responded to this clear failure of cooperation in the Banking Act of commonly called Glass-Steagall , which changed the OMPC into the Federal Open Market Committee FOMC , whose members remained the governors of the twelve regional reserve banks, but whose decisions became binding on the reserve banks.

Within this structure, the district banks participated in the creation of a coordinated, national monetary policy, rather than pursuing independent policies in their own districts. Control of the most important tool of monetary policy, open market operations, was vested in the FOMC, where voting rules favored the Board of Governors. The Banking Act of gave the Board of Governors control over other tools of monetary policy.

The act authorized the Board to set reserve requirements and interest rates for deposits at member banks. The act also provided the Board with additional authority over discount rates in each Federal Reserve district. Originally, decisions about discount rates rested with the Reserve Banks, which set rates independently for their own districts. Changes in discount rates required the approval of the Board in Washington, but the Board could not compel banks to change their rates and the Board was not supposed to set a uniform discount rate throughout the nation.

The final version of Title II arose after a vigorous debate, which lasted throughout the spring and summer, after the Roosevelt administration introduced an initial version of the bill to Congress in February Williams , The initial version of Title II was prepared under the direction of Marriner Eccles , who moved from the Treasury to become governor of the Federal Reserve Board in November and for the next several months closely supervised the staff who drafted the legislation. The initial version proposed a national mandate for Federal Reserve policies and altered qualifications for members of the Federal Reserve Board by providing that they should be persons well qualified by education or experience to participate in the formulation of national economic and monetary policies.

In the past, the law required members of the Federal Reserve Board to be selected from different Federal Reserve Districts and with due regard to a fair representation of financial, agricultural, industrial, and commercial interests, and geographical divisions of the country.

The initial version proposed to eliminate collateral requirements for Federal Reserve notes and to allow the Federal Reserve Banks to purchase any security guaranteed by the U.

This proposal would have allowed the Federal Reserve to expand the supply of money and credit rapidly and without limit by purchasing government debt. In the past, the supply of Federal Reserve notes rose and fell depending upon the quantity of short-term business loans extended by commercial banks within bounds determined by the available supply of gold coins and bullion. This dynamic arose from the real bills doctrine underlying the original Federal Reserve Act, where the extension of commercial loans created collateral that backed additional issues of currency.

The initial version proposed that the chief executive officers and chairman of the boards of the Federal Reserve Banks be appointed to one year terms, subject to the approval of the Federal Reserve Board, and that the governor and vice-governor of the Federal Reserve Board serve at the discretion of the president of the United States. The secretary of the treasury, who served as the chairman of the Board, and the comptroller of the currency, who served as a member of the Board, already served at the discretion of the president.

These changes would have, therefore, enabled the president at any time and for any reason to replace a majority four of seven of the members of the Federal Reserve Board with new appointees. They could, in turn, replace the leaders of all of the reserve banks within twelve months. The initial version also proposed that the FOMC consist of the governor of the Federal Reserve Board, two other members of the Federal Reserve Board potentially the secretary of treasury and comptroller of the currency , and two governors of Federal Reserve banks, elected annually by a vote among the twelve bank governors, each of whom served annual terms subject to the approval of the Federal Reserve Board.

These provisions would have enabled the president to control the actions of the central bank, including open market operations, and directly dictate rates of interest, exchange, and inflation.

When the bill arrived in the Senate, Sen. Carter Glass D-VA declared:. Opposition came from people who feared inflation and worried about the centralization of monetary policy in Washington. Opposition also came from business leaders, bankers, economists, and politicians who doubted the economic theories underlying the controversial provisions of the initial bill and valued ideas embedded in the original Federal Reserve Act, particularly the real bills doctrine, which tied the quantity of currency issued by the central bank to the quantity of short-term business loans extended by commercial banks.

The Senate Committee on Banking and Currency and its subcommittees held extensive hearings on the bill, which began in April and continued into June. The secretary of the treasury, Henry Morgenthau , and the governor of the Federal Reserve Board, Marriner Eccles , testified in favor of the legislation. Other members of the Federal Reserve Board, some members of the Federal Advisory Council, and leaders of more than twenty leading financial institutions also testified, sometimes positively, but in many cases offering constructive criticism.

The hearings held by the Senate in amounted to the most extensive debate about and analysis of the Federal Reserve since the creation of the system in and before the Federal Reserve Reform Act of After these hearings, the Senate Committee on Banking and Currency passed a series of amendments that increased the independence of the Board of Governors and minimized partisan political influence over monetary policy. Examples included removing the secretary of the treasury and comptroller of the currency from the Board of Governors, providing members of the Board of Governors with terms lasting fourteen years, and appointing the chair and vice chair of the Board of Governors to four-year terms that came up for renewal in the second year of the term of the U.

The Senate preserved qualitative constraints on credit and money underlying the Federal Reserve System, with respect to the types of assets that could back Federal Reserve notes or that could be accepted as collateral for discount loans.

The Senate eliminated language changing the mandate and mission of the Federal Reserve. The Senate also eliminated language changing the qualifications for service on the Federal Reserve Board and retained language requiring members of the Board to come from different Federal Reserve Districts and represent the diversity of American economic, geographic, and social interests.

The remaining sections of the act invoked less discussion. Congress had created a temporary deposit insurance program in Some altered the investments that banks were allowed to make.

Others altered arrangements for voting on bank stock and rules regarding the governance of financial firms. A large literature characterizes the range of changes. Here, we emphasize a particularly important example.