4.03: How Does the Fed Affect Me?
Member Banks
- Consists 38% of commercial banks in the US (Bank of America) - Hold stock in regional Fed. Reserve Bank and can receive dividends (payout to stockholders of a portion of company profits, based on a number of shares owned.) or a portion of the Fed's earnings (from providing banking services to district banks) -
Federal Reserve Banks
- Consists of 12 Fed. Reserve Banks, each serving own region or district of the US - Includes 24 Branch Banks under the 12 Fed. Reserve Banks that assist the Reserve Banks in meeting goals - Provide service to commercial banks and the U.S. Tresury- a Federal Reserve Bank is called a "BANKER'S BANK" as it helps banks manage their funds - Supervise commecial bank operations within their region -Handle check collection, electronic funds, transfer, distribution of currency and coin to banks - Provides services from US Treasury accounts-- issue and redemption of the US government bonds and securities - Located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco - 24 Branches Locations: Pittsburgh, PA; Cincinnat, OH; Baltimore, MD; Charlotte, NC; Nasvhille, TN' Birmingham, AL; New Orleans, LA; Jacksonville, FL; Miami, FL; Detroit, MI; Louisville, KY; Little Rock, AR; Memphis, TN; Helena, MT; Denver, CO' Omaha, NE; Oklahoma City, OK; El Paso, TX; San Antonio, TX; Houston, TX; Seattle, WA; Portland, OR; Los Angeles, CA; Salt Lake City, UT
Board of Governors
- Consists of 7 memebers, each w/ 14-year term - Appointed by President, confirmed by Senate - Analyzes economic data such as interest & unemployment rates - Supervises Federal Reserve Banks - Creates/oversees financial regulations - Participates in Federal Open Market Committee -Communicates w/ leaders of other parts of government
The Federal Open Market Committee
- Consists of Board of Governors, President of NY Reserve Bank, and 4 other Reserve Bank Presidents on a rotating basis - Gathers for 8 meetings per year in Washington, D.C - Uses data, like unemployment rate, to determine state of economy and decide what measures should be taken to adjust the money supply
Other Depository Institutions
- Technically not part of the Federal Reserve System, yet subject to regulations - Includes credit unions, savings and loan associations, commercial banks, and savings banks - Receive services from regional Federal Reserve Bank such s check processing, electronic funds trnasfer, and distribution of currency and coin
# of regional fed reserve banks
12
Board of Governors (CP)
7 members w/ 14 year terms
Example of non-member depository institution
Credit Union
Collaboration between presidents of regional banks and Board of Governmours
FOMC
The ________ Banks process check and electronic payments.
Federal Reserve
The president of _______ regional Bank is a permanent FOMC member.
New York
The --- appoints the Board of Governors
President
Member banks own _________ in the Federal Reserve.
Stock
CC
The Federal Reserve works to promote full employment, price stability, and economic growth.
Money Supply
The total amount of money available in the national economy
FOMC meets in _____________.
Washington DC
Fed monitors the activity of
banks
Goal of Fed- full
employment
Goal of Fed- economic
growth
Fed controls the
money supply
Goal of Fed- price
stability
