Econ chapter 14 pt 2

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Federal Reserve Banks

12 banks chartered by U.S. government to control the money supply and perform other functions. They serve as the central bank in America.

The Federal Reserve Board of Governors

7 member group that controls money and banking system of the US. Coordinates policies for the 12 Federal Reserve Banks

Federal Open Market Committee (FOMC) consists of:

7 members of the Board of Governors The President of NY Fed Reserve Bank (most important) Four of the remaining presidents of the Fed Reserve

Federal Reserve System

Central component of U.S banking system. Consists of the Board of Governors of the Federal Reserve and 12 Regional Federal Reserve Banks

mortgage-backed securities

Pools of mortgages used as collateral for the issurance of securities in the secondary market.

Bankers' Banks

Provide same service to banks and thrifts that banks and thrifts provide to public. 12 Federal Banks are one of these banks.

The chairperson of the Federal Reserve Board is selected by the

U.S. president and confirmed by the Senate.

Quasi-Public Banks

a privately owned but gov'tly controlled bank. 12 Federal Banks are one of these banks.

Troubled Asset Relief Program (TARP)

allocated $700 billion to the U.S.

subprime mortgage loans

high-interest rate loans to home buyers with above-average credit risk

securitization

slicing up and bundling groups of loans, mortgages, corporate bonds, or other financial debts into distinct new securities.

moral hazard

the possibility that individuals or institutions will change their behavior as the result of a contract or agreement

The Federal Open Market Committee (FOMC)

votes on the Fed's monetary policy and directs the purchase or sale of government securities.

The Federal Open Market Committee (FOMC) includes

the Board of Governors members and 5 of the 12 presidents of the Federal Reserve Banks, of which the president of the New York Fed has a permanent voting seat.

financial services industry

the broad category of firms that provide financial products and services to help households and businesses earn interest, receive dividends, obtain capital gains, insure against losses an plan for retirement.


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