115 Chapter 5 Federal Reserve System how member banks use personal customer information that is not publicly available. Many regulations are issued to implement laws passed by Congress that affect the banking industry. In addition to making regulations, the Fed supervises its member banks to evaluate their soundness. Bank examiners conduct on-sight audits of member banks. The Fed also uses software to screen the activities of member banks for negative trends and possible problems. Financial Services The Federal Reserve provides several services to its member banks. In addition to providing short-term loans to banks as discussed above, Federal Reserve Banks offer services: • collecting and paying funds when two member banks use checks to transfer funds between them • transferring funds almost immediately • offering customer services such as depositing a payroll check directly into a bank account and automatic payment of some bills, such as a car or house payment, directly from the customer’s account • holding the reserves that member banks are required to maintain The Fed provides necessary services to the US government as well. These activities make it the nation’s bank. In this area, the Fed: • holds all of the checking accounts owned by the US government from which tax refunds and Social Security benefi ts are paid • monitors the value of the dollar compared to the currency issued by other nations and 2007 200 8 200 9 2 0 1 0 2011 2012 2013 2014 2015 2016 2 0 1 7 0 2 4 6 8 10 12 14 Prime Rate Discount Rate Figure 5-4. Discount Rate and Prime Rate