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 of the executive branch. However, the Fed reports to the US Congress. The Fed’s actions should be in-line with the government’s economic goals. Twice a year, the Fed chairperson reviews the Fed’s recent actions and its economic predictions and presents these to Congress. If legislation related to banking and fi nance is under consideration, Congress often requests additional presentations. All of the members of the BOG are appointed by the US president and confirmed by the Senate. Five members serve 14-year terms. The fi 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. There have only been 16 chairs since the Fed’s founding in 1913. The longest serving Fed chair was Alan Greenspan. He served from 1987 to 2006. He was fi rst appointed by President Reagan and went on to serve fi 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 2014, President Barack Obama appointed Janet L. Yellen as Fed chair. Her fi rst term as Fed chair is from February 2014 through February 2018. fi 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 Th ki f h Th k 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 specific, going so far as 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