The Federal Reserve Bank

1. The Federal Reserve Bank Monetary Policy in America

2. Field Trip Facts • Date of the trip: Monday, November 22, 2010 • Transportation: District Bus to Fort Washington Train Station • The group will ride SEPTA to Market East and walk to sites • Departure at 8:45am (room 175) and return at 2:15pm • Cost: Train Fare=$7 per person plus money for lunch at Reading Terminal Market or bring a bag lunch • Expect airport-like security at the Fed

3. What does the Federal Reserve Bank of Philadelphia do? • The Federal Reserve Bank of Philadelphia helps formulate and implement monetary policy, supervises banks and bank and savings and loan holding companies, and provides financial services to depository institutions and the federal government.

4. What does the Federal Reserve Bank of Philadelphia do (cont…)? • It is one of the 12 regional Reserve Banks that, together with the Board of Governors in Washington, D.C., make up the Federal Reserve System. The Philadelphia Federal Reserve Bank serves eastern Pennsylvania, southern New Jersey, and Delaware.

5. Key Statistics from Federal Reserve Bank of Philadelphia • Number of employees: 820 (2010) • Banks and savings and loans in the District: 351 • Bank holding companies and state member banks supervised: 130 Currency processed: $23.7 billion (2009) • Coin paid and received: $215.1 million (2009)

6. Three Functions of the Federal Reserve • Establishes and implements monetary policy • The 12 Federal Reserve Banks Operate the nation’s payments system • Supervises and regulates the banking system

7. Establish and implement monetary policy: Using the tools of monetary policy, • the Federal Reserve can affect the volume of money and credit available in the economy and the price of credit—interest rates. In this way, the Federal Reserve can influence the general level of prices, employment, and output.

8. Operate the nation’s payments system: The 12 Federal Reserve Banks provide • banking services to depository institutions; they maintain reserve and clearing accounts to provide various payment services, including collecting checks, electronically transferring funds, and storing, distributing, receiving, and processing currency and coin. • For the federal government, the Reserve Banks maintain the Treasury Department’s transaction account, pay Treasury checks, process electronic payments, and issue, transfer, and redeem U.S. government securities.

9. Supervise and regulate the banking system: The Federal Reserve System has • supervisory and regulatory authority over a wide range of financial institutions and activities. It works with other federal and state authorities to ensure the safety and soundness of financial institutions, stability in financial market

10. Structure of the Federal Reserve System • Note: Begin filling in the blanks for Activity 7 • The Federal Reserve Bank of Philadelphia is one of the 12 regional Reserve Banks in the United States that, along with the Board of Governors in Washington, D.C., make up the Federal Reserve System—the nation’s central bank.

11. Structure of the Federal Reserve System • The Federal Reserve System was established by Congress in 1913. The Fed reports to Congress but carries out its responsibilities independently. The Fed typically remits 90 percent of its earnings to the U.S. Treasury.

12. Structure of the Federal Reserve System • To ensure a sound financial system and a healthy economy, the Fed conducts monetary policy, supervises and regulates financial institutions, maintains the payments system, and serves as the lender of last resort in a financial crisis.

13. Structure of the Federal Reserve System • The Board of Governors, led by its Chairman, is a federal government agency and the centralized component of the Fed. Located in Washington, D.C., the Federal Reserve Board consists of seven members—called Governors—who are appointed by the President of the United States and confirmed by the Senate. A Governor’s term is 14 years, with appointments staggered to ensure Board continuity. The terms of the Chairman and Vice Chairman are four years.

14. Structure of the Federal Reserve System • The Federal Open Market Committee (FOMC) is the Federal Reserve’s chief monetary policymaking body. The FOMC’s decisions ultimately affect interest rates. The FOMC’s voting membership includes the seven members of the Board of Governors, the president of the New York Reserve Bank, and four of the other 11 Reserve Bank presidents, who serve in an annual rotation.

15. Structure of the Federal Reserve System • But regardless of their voting status, all Reserve Bank presidents offer views on economic conditions in their regions and the nation at every FOMC meeting. The Board’s Chairman also serves as FOMC Chairman, while the New York Fed president serves as FOMC Vice Chairman.

16. Financial Plan Worksheet • Beginning today and during your trip to the Fed, you will create a financial plan for a family using the worksheet and client description cards • Using the client description card, complete the front page of the activity plan worksheet • Hand in the worksheet • Expect to complete the worksheet at the “Swipe it” exhibit at the Federal Reserve Building

17. Trip reminders: • Meet in room 175 at 8:45am. Mr. Stover will be going with us to Philly • Expect to walk outside rain or shine • Expect “tight” security • Expect a walk thru “The Mint” to see money production • Bring money for lunch or a bag lunch