Saturday, August 6

Federal Reserve Building

The Fed, the US central banking system, created in 1913 in response to a series of financial panics, particularly a severe panic in 1907. Sound familiar ? Over time, the Fed's role has changed in response to things like the Great Depression. Its duties today "are to conduct the nation's monetary policy, supervise and regulate banking institutions, maintain the stability of the financial system and provide financial services to depository institutions, the U.S. government, and foreign official institutions" , according to their charter.

The Fed's structure composed of the presidentially appointed Board of Governors (or Federal Reserve Board), the Federal Open Market Committee (FOMC), 12 regional Federal Reserve Banks located in major cities throughout the nation, numerous privately owned U.S. member banks and various advisory councils. The FOMC is responsible for setting monetary policy. The Fed designed to serve the interests of both the general public and private bankers. The result : a unique structure among central banks.

The Fed independent inside government, ie, "its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government." However, its authority from Congress and subject to congressional oversight. Uncle Sam receives all of the system's annual profits, after a statutory dividend of 6% on member banks' capital investment is paid, and an account surplus is maintained. In 2010, the Federal Reserve made a profit of $82 B Band transferred $79 B to the U.S. Treasury. (Source: Wiki &c.)