The Federal Reserve System
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g representatives of industrial or agricultural companies, are actively used in the practice of loan funds. Board of Governors of the Federal Reserve further appoint three directors of the third rank (class C) in each Federal Reserve Bank. See Table 1 p. 30to the original plan for the organization of the Fed thought it necessary to represent in his person the authorities and the general public. In addition, the Director of the third rank may not hold in the bank to any other post. Board of Governors of the Federal Reserve chooses and appoints the chairman and his deputy from among the directors of the third rank. of profit to any Federal Reserve Bank as a result of activity also reflects the previously noted by the nature of its structure. Each bank - member of the Fed - is obliged to purchase from the Federal Reserve Bank of its district a certain number of shares for an amount of 3% of its own equity and retained earnings, lawfully this amount on demand can be doubled. With the increase of share capital and profits of commercial banks, he is obliged to purchase more shares to maintain a regulated three-percent level. Dividends paid on these shares, limited to 6%, and more than 90% of the total income of the Federal Reserve Banks returned to the U.S. Treasury. The main purpose of the Federal Reserve Banks is not extracting the maximum profit, but an embodiment of life and economic reality of a certain U.S. monetary policy and guide multi-faceted economic and financial activities of the Federal Reserve System. of the twelve Federal Reserve Banks is a weekly financial report on the results of its activities to the Board of Governors of the Federal Reserve, which summarizes and processes incoming information, and then publish at the end of each week. Federal Reserve Banks is located in Washington and designed to adjust and meet the mutual claims and claims Federal Reserve Bank, arising from the movement of bank deposits from one Federal Reserve district to another. to the adopted legislation, all national banks to the U.S. are required to maintain their membership in the Federal Reserve System, in addition, a number of banks in the state voluntarily expressed their desire to join the Fed. Their request was granted. Until 1980, banks belonging to the Fed, have certain advantages over other banks and savings and loan institutions. Having the status of a member of the Federal Reserve bank, the financial authority acquired a certain prestige. Fed member banks are entitled to receive loans from Federal Reserve Bank of order, as well as to place, these banks cash, services of the Federal Reserve provided for clearing of checks, we finally obtain the necessary advice on financial matters of interest. In addition, the Fed's member banks have the right to use the teletype lines for the Fed funds transfer. In fairness it should be noted that the services of clearing checks were not the exclusive privilege of member banks of the Fed as the bank does not belong to this system, had the right to register with the Fedof the deregulation of deposit takers and the control of monetary circulation in 1980 removed most of the differences between the member banks the Federal Reserve and other banking institutions. In the seventies, more than 500 banks have stopped his membership in the Federal Reserve System, mainly due to a sharp rise in market rates of interest in that period. The high level of market rates of interest was sharply raising the opportunity cost of reserve requirements of member banks of the Fed. The legislative act of 1980 eliminated the differences in reserve requirements from different banks and deposit-taking institutions.
1.2The organizational structure of the U.S. Federal Reserve
The Fed has three parts: See table 2. P 31
-Central Council of Governors, which is located in Washington, DC
12 of the Federal Reserve Banks spread across the U.S
Operations Committee on the open market.Board of Governors consists of seven members (governors) are appointed by the President of the United States and approved by the U.S. Senate for 14 years without the right destination for a second term (the exception is a situation where the governor has replaced its predecessor and leaves the 14 year period. In this case, if all the governors fully worked out his term, the U.S. president can nominate only two new candidates (if re-elected president, he can choose two more candidates for governor). This rule applies to exclude the chance that the president will appoint to the Board of Governors only his supporters, which will allow him to exert influence on the Fed. However, in practice many governors who leaves his job at the Fed before the expiration of 14-year period, and many presidents were nominated for more than two governors. The term of office of governors always expire on January 31. By law, the governors should be "financial, agricultural, industrial and commercial interests, as well as all regions of the country.".S. territory is divided into four regions, each of which operate with Federal Reserve Banks. In the first region includes the Boston, Philadelphia and Richmond. The second group includes Cleveland and Chicago, the third - Atlanta, St. Louis and Dallas, the fourth - Minneapolis, Kansas City and San Francisco. Each region can be delegated to the governors of not more than one representative.his appointment as members of the Board of Governors of the Federal Reserve have the same freedom of action, as the U.S. Supreme Court. After taking office, they cannot be dismissed on the grounds that their views do not reflect the views of other governors or officials. This rule was introduced in order to fully protect the Fed from external influences and to exclude the impact of political motives in the governor's decision. The governors work in constant cooperation with the U.S. administration. They often come out with a report to Congress.
"Face" The Fed is the Chairman of the Board of Governors, which is responsible for the activities of the entire system. Chairman of the Board of Governors and Vice-President may hold office for four years. The U.S. president selects from among the governors, the nomination must be approved by the Senate. Curiously, many leaders of the Federal Reserve hold office more than 14 years. Chapter Board of Governors of the Federal Reserve from time to time meets with U.S. President and the Minister of Finance. Chairman of the Board of Governors of the Federal Reserve also has a number of commitments at the international level, in particular, is an alternative member of the Board of Governors of the United States in the International Monetary Fund and a member of the U.S.
Federal Reserve Bank
According to the law of the Fed's entire territory of the United States divided by 12 reserve districts, each of which is serviced by the Federal Reserve Bank of the district. Federal Reserve Banks are the main operational arm of the Federal Reserve System, acting as the central bank for its district. Each of them is a kind of joint-stock company whose shares are owned by member banks of the district.of Federal Reserve Banks, along with their 25 branches carry out such functions as the Fed actuation of a nationwide payments system, the distribution of the national currency, controlling and regulating member banks and bank holding companies, as well as the function of the banker for the U.S. Treasury. Each Reserve District marked its letter and number, so all the U.S. currency will carry a note with the number and letter of the Reserve Bank, who first released it into circulation. In addition to performing the functions of the Federal Reserve system as a whole, such as conducting banking and credit policy, each Reserve Bank serves as a repository for funds from other banks in his district and provides loans to banks experiencing financial difficulties.Reserve Bank has a board consisting of 9 directors from non-employees of the bank. Three directors who belong to the class A, represent commercial banks that are members of the Fed. Three directors and three Class B Class C represent the public. Director of class B and C are elected by commercial banks, members of the Fed. Board of Governors in Washington appoints Class C directors from among the directors of class C Board of Governors is elected chairman of the board of directors and his deputy. Director of class B and C cannot be in a bank or bank holding company nor officials nor the directors nor employees. Director of P cannot hold shares in a bank or bank holding company. The Board of Directors in turn appoint a president and vice president of Reserve Bank, whose choice must be confirmed by the Governing Council.Reserve Bank branch has its own board of directors consisting of 5 or 7 people. Most of those directors appointed by the Reserve Bank of that office, while others are appointed by the Governing Council.Board of Directors of Reserve Banks and their branches provide the Federal Reserve full information about the economic situation in virtually every corner of the country. This information is used by the Federal Open Market Committee and the Governing Council to make important decisions about monetary policy. The information gathered Reserve banks are also available to the public in a special report, which is informally called the Beige Book (The Beige Book). It is published approximately two weeks before each meeting of the Federal Open Market Committee. In addition, every two weeks, the board of each bank should provide the Governing Council about the discount rate of the bank. And the change it cannot happen without the confirmation of the Governing Council.reserve banks receive mainly from interest on government securities that were purchased on the open market. Other important sources of revenue include in