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Money and Banking, the Fed,

Money and Banking, the Fed,. Money Creation, & Monetary Policy. Monetary Policy 1. Discount Rate 2. Reserve Ratio 3. Bonds 4. ( NEW ) [TAF]Term Auction Facility. Janet Yellen Chairman of the Federal Reserve. Kansas City. Minneapolis. Chicago. Boston. 1. Cleveland. 9.

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Money and Banking, the Fed,

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  1. Money and Banking, the Fed, Money Creation, & Monetary Policy Monetary Policy 1. Discount Rate 2. Reserve Ratio 3. Bonds 4. (NEW) [TAF]Term Auction Facility Janet Yellen Chairman of the Federal Reserve

  2. Kansas City Minneapolis Chicago Boston 1 Cleveland 9 New York 2 Philadelphia 3 7 12 4 SanFrancisco Washington, D.C. 10 (Board of Governors) 8 5 Richmond 6 Atlanta 11 Dallas St. Louis Federal Reserve - 1913 A. Boston B. New York C. Philly D. Cleveland E. Richland F. Atlanta G. Chicago H. St. Louis I. Minneapolis J. Kansas City K. Dallas L. San Francisco

  3. 12 Fed Banks and 25 Branches 7th-G-Chicago (1) 8th-H-St. Louis (3) 9th-I-Minneapolis (1) 10th-J-Kansas City (3) 11th-K-Dallas (3) 12th-L-San Francisco (4) 1st-A-Boston (0) 2nd-B-New York (1) 3rd-C-Philadelphia (0) 4th-D-Cleveland (2) 5th-E-Richmond (2) 6th-F-Atlanta (5)

  4. The Fed’s 25 Branches Fed Quasi-Public Banks.[in combo] Blend of [private ownership(corporations)but public (government)control] The 12 banks are instruments of the government but not owned by the government. The over5,000 banksin the 12 districts buy stock ($1per share)in their district bank (& get 6% dividends[no capital gains]) so the banks are privately owned. Serving the public, it isowned by citizens. The 12 banks are a corporation owned by the banks in their districts, but a public (G) agencydirectly responsible to Congress. They might make $30 billion in one year and turn 90% of that over to the Treasury.

  5. First Dallas Fed [1921] at Akard and Wood

  6. Current Dallas Fed at 2200 N. Pearl Richard Fisher - President of Dallas Fed. Majored in economics at Harvard

  7. Four Part Structure of the Fed Seven Board of Governors • most important body of the Fed • appointed by the Presidentand confirmed by the Senate • 14-year terms are staggered (one replaced each two years) [they arepaid $162,100] • isolationfrom political pressure (only one 14 year term) • the Chairmanserves onlyfour years but can be reappointed [4-year renewable term] 4 times • His pay is $180,100. • Every presidentgets to appoint at least two. Clintonappointed 8 & Bush appointed 4in 1st 2 years. • One term begins every 2 years on Feb. 1 of even numbered years.

  8. First Board of Governors, 1914

  9. Janet Yellen Chair – term ends 2024 Daniel K Tarullo Unexpired term to 2022 Jerome H. Powell Unexpired to 2014 There are currently 4 members of the FED. There are 3 vacancies Jeremy Stein Unexpired to 2018 Sarah Bloom Raskin Served until 3/13/19 3/19/14-Deputy Sec of Treasury

  10. 2. Federal Open Market Committee [FOMC] -Fed’s main policy-making arm -includes 7 Board of Governors, NY Fed President [who is vice chairman, and is the second most important in the system The 4 other bank presidents rotate among the other 11 every 3 years. -other 7 bank presidents are non-voting members -they meet every six weeks

  11. TheFOMC Meeting RoominWashingtonDC The FOMC meets around a27-foot oval mahogany tablein a room with a23-foot ceilingwith a1,000-pound chandelier. Home of 7 Board of Governors

  12. . A Day In The Life Of The FOMC • Typical Meeting • The entire committee [12 members + other 8 bank presidents] examine regional, national and international economic info to assess the strengths and weaknesses of the economy. • After discussing the economy, the voting members vote on the direction of monetary policy. A policy directive describes the committee’sassessment of the economy and the new target fed funds rate. • An announcement is made about 1:15 p.m.

  13. 3. Twelve Fed Banks and 25 Branches

  14. 3. Twelve Fed Banks and 25 Branches 4.Thousands of Member Banks 7th-G-Chicago (1) 8th-H-St. Louis (3) 9th-I-Minneapolis (1) 10th-J-Kansas City (3) 11th-K-Dallas (3) 12th-L-San Francisco (4) 1st-A-Boston (0) 2nd-B-New York (1) 3rd-C-Philadelphia (0) 4th-D-Cleveland (2) 5th-E-Richmond (2) 6th-F-Atlanta (5)

  15. Four Part Make-up of the Fed

  16. Functions of the Fed – besides researching the economy Destroy/Issue paper notes The Fed clears 40%; Banks clear rest electronically.

  17. Financial Services Cash Services Electronic Payments Check Processing

  18. Payment Services Cash • Store cash and coin • Maintain currency’s quality • Detect counterfeits

  19. Payment Services Electronic forms of Payment The Fed handled 42 billion electronic transactions in 2006

  20. The End

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