111
Chapter 5 Federal Reserve System
Board of Governors
The Board of Governors (BOG) is the governing body of the
Federal Reserve System. Although the BOG is a federal governmental
agency, the Federal Reserve System is considered an independent
central bank. It does not report to the US president or any other member
nesgddwdbtshudaq‘mbg-Gnvdudq+sgdEdcqdonqsrsnsgdTRBnmfqdrr-
SgdEdc‘bshnmrrgntkcadhm,khmdvhsgsgdfnudqmldmsdbnmnlhb
fn‘kr-Svhbd‘xd‘q+sgdEdcbg‘hqodqrnmqduhdvrsgdEdcqdbdms
actions and its economic predictions and presents these to Congress.
Hekdfhrk‘shnmqdk‘sdcsna‘mjhmf‘mc›m‘mbdhrtmcdqbnmrhcdq‘shnm+
Congress often requests additional presentations.
All of the members of the BOG are appointed by the US president
‘mcbnm›qldcaxsgdRdm‘sd-Ehudldladqrrdqud03,xd‘qsdqlr-Sgd
chairperson and vice-chairperson each serve four-year terms. Each
district can have no more than one member on the BOG. The chair of the
Board of Governors is usually referred to as the Fed chair.
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longest serving Fed chair was Alan Greenspan. He served from 1987 to
1//5-Gdv‘r›qrs‘oonhmsdcaxOqdrhcdmsQd‘f‘m‘mcvdmsnmsnrdqud
during the terms of three more presidents. Greenspan is thought to be a
genius by some and the architect of the Great Recession by others. In
2006, President George W. Bush appointed Ben Bernanke as Fed chair.
He was reappointed by President Obama four years later. Although the
Fed chair has a very visible role, the Federal Open Market Committee is
the body responsible for making monetary policy.
Ethical
Banking
Those working for the
Federal Reserve are
held to very high ethical
standards. Each district
bank has its own code
of ethical conduct. Many
of the codes are very
rodbh›b+fnhmfrne‘q‘r
to ban Fed employees
from eating meals with
employees of banks they
regulate. The absolute
purity of the Fed is central
to its mission.
Federal Reserve
System
District Banks
Board of Governors
(BOG)
7 members
14-year terms
Federal
Open Market
Committee (FOMC)
12 members
BOG + NY Fed President +
Presidents from 4 of the
other district reserve banks
Chairperson
4-year term
Vice-
Chairperson
4-year term
Figure 5-3.
Structure of the Fed
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111
Chapter 5 Federal Reserve System
Board of Governors
The Board of Governors (BOG) is the governing body of the
Federal Reserve System. Although the BOG is a federal governmental
agency, the Federal Reserve System is considered an independent
central bank. It does not report to the US president or any other member
nesgddwdbtshudaq‘mbg-Gnvdudq+sgdEdcqdonqsrsnsgdTRBnmfqdrr-
SgdEdc‘bshnmrrgntkcadhm,khmdvhsgsgdfnudqmldmsdbnmnlhb
fn‘kr-Svhbd‘xd‘q+sgdEdcbg‘hqodqrnmqduhdvrsgdEdcqdbdms
actions and its economic predictions and presents these to Congress.
Hekdfhrk‘shnmqdk‘sdcsna‘mjhmf‘mc›m‘mbdhrtmcdqbnmrhcdq‘shnm+
Congress often requests additional presentations.
All of the members of the BOG are appointed by the US president
‘mcbnm›qldcaxsgdRdm‘sd-Ehudldladqrrdqud03,xd‘qsdqlr-Sgd
chairperson and vice-chairperson each serve four-year terms. Each
district can have no more than one member on the BOG. The chair of the
Board of Governors is usually referred to as the Fed chair.
Sgdqdg‘udnmkxaddm04bg‘hqrrhmbdsgdEdcentmchmfhm0802-Sgd
longest serving Fed chair was Alan Greenspan. He served from 1987 to
1//5-Gdv‘r›qrs‘oonhmsdcaxOqdrhcdmsQd‘f‘m‘mcvdmsnmsnrdqud
during the terms of three more presidents. Greenspan is thought to be a
genius by some and the architect of the Great Recession by others. In
2006, President George W. Bush appointed Ben Bernanke as Fed chair.
He was reappointed by President Obama four years later. Although the
Fed chair has a very visible role, the Federal Open Market Committee is
the body responsible for making monetary policy.
Ethical
Banking
Those working for the
Federal Reserve are
held to very high ethical
standards. Each district
bank has its own code
of ethical conduct. Many
of the codes are very
rodbh›b+fnhmfrne‘q‘r
to ban Fed employees
from eating meals with
employees of banks they
regulate. The absolute
purity of the Fed is central
to its mission.
Federal Reserve
System
District Banks
Board of Governors
(BOG)
7 members
14-year terms
Federal
Open Market
Committee (FOMC)
12 members
BOG + NY Fed President +
Presidents from 4 of the
other district reserve banks
Chairperson
4-year term
Vice-
Chairperson
4-year term
Figure 5-3.
Structure of the Fed

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