Brooklyn Technical High School



AIM: Why are independent regulatory commissions (and executive agencies) important? Examine the role of the Federal Reserve BoardDo Now: Rd. outline, Answer for class participation/Discussion (write answer in “add class comment” section below) 1) What are the functions of the federal bureaucracy? 2) What is the purpose of a government corporation? What sets it apart from other types of federal agencies? 3) Spotlight on the Federal Reserve Board – What steps did the “Fed” take this week to deal with the financial crisis caused by the pandemic?“Federal Reserve Board (FRB)By Will Kenton Updated Jan 31, 2020What Is the Federal Reserve Board (FRB)? The Board of Governors of the Federal Reserve System, also known as the Federal Reserve Board (FRB), is the governing body of the Federal Reserve System. The FRB was established by the Banking Act of 1935. The members are statutorily tasked with giving a “fair representation of the financial, agricultural, industrial, and commercial interests and geographical divisions of the country.”How the Federal Reserve Board (FRB) Works The Board of Governors of the Federal Reserve System called the Federal Reserve Board or FRB for short, is a seven-member body that governs the Federal Reserve System, the U.S. central bank in charge of making the country's monetary policy.The FRB is considered an independent agency of the federal government. The Fed has a statutory mandate to maximum employment and stable prices at moderate long-term interest rates, and the FRB?chair and other officials frequently testify before Congress, but it makes monetary policy independently of the legislative or executive branches and is structured like a private corporation.Key TakeawaysThe Federal Reserve Board governs the Federal Reserve System.The FRB is considered an agency independent of the federal government.The FRB is in charge of the open market operations of the federal funds rate.Appointments, Terms, and Roles The president appoints the FRB's members, and they are confirmed by the Senate. Each?is appointed?to a single 14-year term but may serve shorter or longer periods. A new board member serves the remainder of the outgoing member's term if any. The new member may then be reappointed to one full term. If a replacement has not been confirmed when that term expires, they may continue to serve, so that it is possible for a member to serve for much longer than 14 years. However, the President is allowed to remove a member from the board, given sufficient cause. Terms are staggered so that a new one begins every two years. Once appointed, each board member operates independently.The chair and vice-chair for the supervision of the Federal Reserve Board are appointed to four-year terms by the president from among the board's existing members. They can be reappointed to these leadership roles as many times as their term limits as board members allow.?The board of governors includes several subcommittees with their chairs and vice-chairs. These are the committees on board affairs; consumer and community affairs; economic and financial monitoring and research; financial stability; Federal Reserve Bank affairs; supervision and regulation; payments, clearing, and settlement; and the subcommittee on smaller regional and community banking.?Duties of the Federal Reserve Board (FRB) The Federal Reserve Board members' most important role is as members of the Federal Open Market Committee (FOMC), which is in charge of the open market operations that determine the federal funds rate, one of the global economy's most important benchmark interest rates. In addition to the seven governors, the FOMC?consists of the president of the Federal Reserve Bank of New York and a rotating set of four other branch presidents. The chair of the FRB also chairs the FOMC.The FRB is directly in charge of two other monetary policy tools, the discount rate?(based on suggestions from the regional branches) and reserve requirements. It is also tasked with supervising the Fed's 12 regional branches.” (Investopedia)The Fed Steps Up but Can’t Save Economy on Its Own “The Federal Reserve is pulling out the stops to help the economy. Now it needs the rest of the government to play along by enacting fiscal stimulus.The Fed on Monday announced a major expansion to its lending programs. It said that the purchases of Treasury and mortgage securities will now be essentially without limit, and to those it added commercial mortgage-backed securities. It relaunched the crisis-era Term Asset-Backed Securities Lending Facility, or TALF, under which it will lend money to investors to buy securities backed by small business and student and credit-card loans, among others. It also moved to support large corporations by establishing facilities that will lend to investment-grade companies and buy high-grade corporate debt and U.S.-listed exchange-traded funds in the investment-grade corporate-bond market…” “Perhaps most important of all, the Fed said it would soon begin a program that will support lending to small and midsize businesses. These are the ones that have been at the epicenter of the novel coronavirus crisis—the restaurants and barbers and shops that first logged a dramatic decline in sales as people took up social-distancing measures and then, as more state and local authorities announced shutdowns, largely went dark. The faster those businesses, which employ tens of millions of people, can get the support they need to survive, the more jobs will be saved when the crisis ends and the better off the economy will be…” (WSJ, 3/23/20)Outline ................
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