The Federal Reserve: Central Banking In The Us Essay

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The Federal Reserve: Central Banking in the U.S. The Federal Reserve as we know it today was created by the Federal Reserve Act of 1913 by President Woodrow Wilson. The Fed, as it is commonly referred, is the central bank for the United States. Primarily, the Fed's job is to manage our nation's money supply. Prior to establishing the central bank, the United States did not have a money manager and the financial system was similar to the nation itself, "diverse and subject to uneven growth" (San Francisco). This led to frequent depressions and financial panics, and after the Bank Panic of 1907, which consisted of heavy withdrawal of funds, large importations of gold, and among other things, a major bank failing, the public realized …show more content…
banking system. The Federal Open Market Committee, another component of the Federal Reserve System, is responsible for overseeing open market operations [buying and selling of government securities] in the U.S. and is the primary tool of U.S. national monetary policy. Seven members of the Board of Governors and five representatives selected from the Federal Reserve Banks form the committee. The representative from the 2nd district, New York, is a permanent member, with the other banks rotating on two and three year intervals. The Federal Reserve Banks are owned by private member banks. These private member banks own nonnegotiable shares of stock in its regional Federal Reserve Bank. A U.S. Court of Appeals case, Lewis v. United States ruled that "the Reserve Banks are not federal instrumentalities for purpose of the FTCA, but are independent, privately owned and locally controlled corporations ("Court Rules")." Member banks are privately owned corporations which own the Federal Reserve Banks. Some member banks have publicly traded stock. There are 12 Federal Reserve Districts throughout the U.S., with regional headquarters being in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. There are also Branches of Reserve Banks in 25 other cities (San Francisco). Each of those 12 Reserve Banks has a

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