The Federal Reserve System :: essays research papers

The national second-stringer System was founded by Congress in 1913, it began to operate in Nov., 1914. Its setup, although somewhat altered since its establishment, particularly by the Banking Act of 1935, has remained substantially the same. twistThe Federal Reserve Act created 12 regional Federal Reserve banks, supervised by a Federal Reserve Board. Each reserve bank is the central bank for its district. The boundary lines of the districts were drawn in consonance with broad geographic patterns of business, and the banks were placed in Boston, New York City, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. In accession some of the regional banks have one or more limb banks attached to them.All national banks must belong to the system, and state banks may if they meet certain requirements. Member banks hold the bulk of the deposits of all commercial-grade banks in the country. Each member bank is compulso ry to own blood line in the Federal Reserve bank of its district and must celebrate legal reserves on deposit with the district reserve bank. The required reserves argon proportionate to the member banks own deposits, the proportion varying according to the location of the member bank and the reputation of its deposits.Each reserve bank is managed by a board of nightclub directors (three appointed by the Federal Reserve Board, six by the topical anaesthetic member banks). The Federal Reserve Systems Board of Governors designates one of the federally appointed directors as chairman and Federal Reserve gene it is the chairmans duty to report to the Board. The board of directors appoints the banks president and other officers and employees. The operations of the Federal Reserve banks, although not conducted in the first place for profit, yield an income that is ordinarily sufficient to cover expenses, to pay a 6% cumulative dividend annually on the stock held by member banks, t o become additions to surplus, and to provide the U.S. Treasury with over $1 billion a year in revenue.The Board of Governors of the Federal Reserve Systemthe national supervisory agencyis composed of seven members appointed for 14-year terms by the President. Its offices are in Washington, D.C. The Federal Open Market Committee, created later (1923) than the systems other divisions, comprises the seven members of the Board of Governors and five representatives of the Federal Reserve banks it directs the purchases and gross sales by the reserve banks of federal government securities and other obligations in the cave in market.