chapter 15 – the federal reserve system section 1
TRANSCRIPT
Chapter 15 – The Federal Reserve
System
Section 1
Structure of the Federal Reserve
Private Ownership:
Privately owned by its member
banks- commercial banks that own shares
of Federal Reserve stocks
Board of Governors• 7 members appointed by the
President• 14 year term ~ terms are staggered
so there is always a vacancy every 2 years
District Banks
• Began as 12 independent and equally powerful banks
• Each region has its own president and board of
governors ~ but are supervised by the Federal Reserve Board
in D.C.
Open Market Committee• Makes decisions about growth of the
money supply & interest rates
Advisory Committees• 3 advisory committees that advise the
Board of Directors• One representative from each district
• Advise on overall economic health, credit laws, and savings banks
Responsibilities
1.Monitors reserves in state member banks
2.Monitors bank holding companies: companies that have stock but do not
take deposits
3. International supervision
4. Mergers
Section 2
Monetary Policy:
• The expansion and contraction of the money supply in order to influence costs
Legal Reserves
• Consists of coins and currency that banks hold in their vaults
• A required percentage must be set aside for legal reserves
How Banks Operate• Banks have Liabilities = debts
and obligations to others
• A Balance sheet helps report the liabilities and assets to show their net worth = the excess of assets over liabilities (measure of value of a business)
Federal Spending
After the budget activity and the video, which federal program would you alter if you had the opportunity? In your opinion, does this program
deserve more or less federal funding? Why?