Federal Reserve Banks example essay topic

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 government. 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 districts. 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 Monetary Act was passed which is another source to conduct their own income. The act feeds from the provisions of priced services to certain institutions. But although this system seems good for profit, the banks see no money. The money that sounds so good is used to cover previous spending or borrowed earnings.

Gearing through the monetary policy, the main goal of the central bank is to (sneaky enough) influence the flow of money in the nation. "Secondly, the boards of directors of the Federal Reserve Banks initiate changed in the discount rate, the rate of interest on loans made by Reserve Banks to depository institutions at the "discount window". Discount-rate changes must be approved by the Board of Governors. All depository institutions that are subject to reserve requirements set by the Federal Reserve - including commercial banks, mutual savings banks, savings and loan associations, and credit unions- have access to the discount window". (1 - Reserve Board) This quote displays the boards of director's responsibility to fluctuate the discount rate which in return will help the research groups in banks examine current development in the community. Most Reserve Banks will establish a monthly record that analyzes issues within their own district.

"In addition to its money and credit responsibilities, the Federal Reserve has broad supervisory and regulatory authority over the activities of state-chartered member banks and bank holding companies, including their foreign activities and Edge corporations, and foreign banks operating in the United States. It is also charged with writing regulations for the major federal consumer credit laws". (2-Cleveland) By this they meant that some of these responsibilities are given to the Banks by the Board. They can range anywhere from examining the state-charter banks, also follow up on the companies in which run the banks they look upon. Applications to the holding banks are a power granted as a responsibility.

Meaning, the Federal Reserve examines and determines whether or not these banks companies or charter banks meet their standards. The Federal Reserve banks are also responsible for holding governmental records of issuing billions of dollars within accounts here in the United States. How? You might ask. Well the Banks have secured vaults with collateral for government agencies that in return will protect any public funds that are placed within depository institutions. Falling into public debt, the banks issue alternatives to enhance living standards with a lower cost into the future for customers.

These alternatives can range from savings bonds to Treasury securities. "They have certain responsibilities for allotment and delivery of government securities for wire transfer of securities". (2 - Cleveland) So, the banks pay on growing interest to cover outstanding payments dealing with the Unites States Treasury, federal agencies and the government's entirety. The word currency (money in any form when in actual use as a medium of exchange, especially circulating paper money) (3 - Dictionary) filters back into the Federal Reserve distributing this money to desperate institutions inside the public. The need for cash has created a movement of distributors which in return helps get cash to the community.

This system works as follows: Popular season only bring more business to store owners. Profits are at their highest but the way they receive more supply is because of the currency distribution. In return, when the season slow down, jacked up profits are sent back to the Reserve. The amount of information between institutions is impossible to follow through mail or annual meetings. In time a system was created to help withhold the pressure of observing separate documents.

The Federal Reserve Communications System (FRCS) gives headquarters the power to link data together in the matter of minutes throughout the world. In conclusion, the Federal Reserve System was created for one specific purpose with its sides; to stable a community by distributing money with interest rates within firms and businesses. The economic world continues to connect in all different ways. Basing profits on rates and changes, the Reserve System continues to help steady the flow of public living,

Bibliography

Page 1. The Federal Reserve Board. Copyright 2005.
All rights reserved 2. The Federal Reserve Bank of Cleveland. Copyright 2004.