The public hears lots about the Federal Reserve system but they actually know little about the mechanics of the country’s central banking system, which goes back to 1913.
The president appoints and the U. S. Senate confirms the Governor to a four-year term. Currently, it’s Ben Bernanke. The president also appoints the seven Board of Governors of the Federal Reserve System, each with 14 year terms.
The seven board governors oversee the twelve banks. These are privately owned by member banks in their region. Each of these twelve regional banks have nine member boards that represent financial institutions and stakeholders in their districts. They are technically owners, not accountable to Washington politicians, and theoretically, at least, represent their own districts.
The Federal Open Market Committee (FOMC) is not part of that process. It’s in charge of the Fed’s Open Market Operations which handles the nation’s monetary policy. It is composed of twelve voting members, seven from the Federal Reserve Board and five from among the regional Federal Reserve Bank presidents.The New York Federal Reserve Bank president is always on the FOMC, while the others rotate one-year terms by special formula.
They are relatively independent of the usual Washington political input, though recent Obama administration and Congressional pressures have been mounting.
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