Essay on Federal Reserve System

This essay has a total of 1324 words and 7 pages.

Federal Reserve System

Although the name the Federal Reserve System sounds governmentally controlled, that
assumption of conducting is false. The FRS is independently within the outskirts of the
government. Final decisions within the board are not concluded by the president, but the
Federal system allows for a review by Congress. The FRS will annually report to Congress
basically to inform them on the status of their work in progress. So the FRS is clearly
established and controlled by themselves within the guidelines and restrictions by

The forming of the structure had 2 goals. One was to; "serve as lender-of-last-resort in
times of crisis. Secondly to provide a national currency that would expand and contract as
needed. It all started during the Banking Panic of 1907, it was known and still is known
today as the worst banking deficit of the 4 in the previous 34 years. Abram P. Andrew was
assigned in 1908 to study all the worlds banking problems. Upon this he sorted out
thousands of documents allowing him to successfully provide descriptions of each bank
during this time. After such research, it was shown that two-thirds of the banks in the
country were hard for cash. Meaning banks were searching ways to find money to continue
distributing. So what did this due to the economy? Both men and woman lost their jobs,
banks firms went into bankruptcy and import and export trading values were stopped. The
credit within the economy was ceased and unable to operate. Now, here we are with the FRS
which helps regulate these issues. This system consists of seven boards of governors and
twelve districts.

The members on the board when signed are appointed by the president to serve a 14-year
term. Only one member of the board can be selected to the twelve Federal Reserve

Board of Governors of the Federal Reserve System, Washington, D.C.

Federal Reserve Bank city

Federal Reserve Branch city, by District:
(2) Buffalo
(4) Cincinnati, Pittsburgh
(5) Baltimore, Charlotte
(6) Birmingham, Jacksonville, Miami, Nashville, New Orleans
(7) Detroit
(8) Little Rock, Louisville, Memphis
(9) Helena
(10) Denver, Oklahoma City, Omaha
(11) El Paso, Houston, San Antonio
(12) Los Angeles, Portland, Salt Lake City, Seattle

These twelve districts; Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City,
Minneapolis, New-York, Philadelphia, Richmond, San Francisco and St. Louis are the major
locations for the FRS banking. Members of the board are responsible for many things that
tie into the structure of the FRS. Primary responsibilities have board members mangled up
with monetary policy. These seven members are not only isolated into the Reserve System,
they also make up the 12- member FOMC (Federal Open Market Committee). They issue the
affecting cost and money that is out there and available in the community. These topics
are talked about during their 2 to 3 meeting weekly. Publicly accepting, these meetings
are a great chance for the public to follow discount rates and general changes in the
economies money. A few incidents are possible. Confidential information dealing with money
will result in closed meetings to deal with the issue just within the board. But not
forgetting about regulations and duties, members of the board do confer with officials of
other government agencies, bank reps and most importantly business supervisors from other
countries who deal with large trades. The banks within the system are selected and closely
regulated by the board of governors.

Each bank consists of a nine member union which oversees its operations. The banks within
the system generate their own income through interest earned from the same reasons as were
we covered with Kuhn's concept; governmental securities. In the early to mid 1980's, the
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