Question

Create two posts, each with an answer to these questions:

1. What is “The Fed”? What are its functions? What changes in the functions of The Fed arose through the Financial Crisis? I am particularly interested in the third part of this question. Use support from your text and one citation.
2. Below are two hypothetical ways The Fed may be appointed. Would you favor either one of these two methods over the present method? Why or why not? In your answer, describe how the Chair and Board of Governors of The Fed is currently selected and use one outside citation to support your argument regarding your thoughts on The Fed appointment options below.
   • Upon taking office, the U.S. president appoints 7 people to the Federal Reserve Board, including a chair. Each appointee must be confirmed by a majority vote of the Senate, and each serves the same 4-year term as the President.
   • Congress selects 7 members from its ranks (4 from the House of Representatives and 3 from the Senate) to serve at its pleasure as the Board of Governors of the Federal Reserve System.

Create one thread in response to each of the above questions. Each thread should be at least 150 words

Answer 1

1. The Fed

The Federal Reserve System was created by Congress in 1913. The responsibilities of the Federal Reserve include influencing the supply of money and credit; regulating and supervising financial institutions; serving as a banking and fiscal agent for the United States government; and supplying payments services to the public through depository institutions like banks, credit unions, and savings and loans. Payments services include issuing, transferring and redeeming U.S. government securities, processing and clearing checks, and transferring funds.

The Federal Reserve System also, known as "The Fed", is American's central bank. That makes it the most powerful single actor in the U.S economy and thus the world economy. It is so complicated that some consider it a "secret society" that control the world's money. They are partly right. Central bank do manage the supply around the globe, but there is nthing secre about it. The fed system, conducts the nation's monetary policy, supervises and regulates banks and provides a variety of financial services to the U.s government and to the nation's bank.

The Federal Reserve System is supervised by the Board of Governors. Located in Washington, D.C., the Board is a federal government agency consisting of seven members appointed by the President of the United States and confirmed by the U.S. Senate. The Board has about 1,850 employees.

Highlights of "The Fed"

• Central Bank of America
• The Board of Governors of the Federal Reserve System plays a major role in making U.S. monetary policy.
• Supervises and regulates banks and provides a variety of financial services to the U.s government and to the nation's bank.

• The seven members of the Board are appointed by the President of the United States for staggered 14-year terms.
• The Board of Governors supervises the work of the Federal Reserve Banks and issues a variety of banking and consumer-credit regulations.

FUNCTIONS OF THE FED

The Fed most important functions are: Conduct the nation’s monetary policy, Provide and maintain an effective and efficient payments system, and Supervise and regulate banking operations. The Fed functions in detail are :

• Issuing Currency :- Fed reserve banks issue federal reserve notes
• Setting and holding reserve requirements :- Fractions of checking account balances that banks have to maintain.
• Lending to financial institutions & serving as an emergency lender :- Fed gives routine short term loans to banks and charges them interest. Ie. discount rate.
• Providing for check collection :- Fed provides banks with the means to collect checks.
• Acting as a fiscal agent :- Provider of financial services for government.
• Supervising banks :- Makes periodic examinations to assess the banks profitability.
• Controlling money supply :- Feds ultimate responsibility, influences interest rates.

Changes in the functions of The Fed arose through the Financial Crisis

The Federal Reserve System is a America's central bank . It is the main policymaking institution charged with fighting recessions. It is also one of several institutions charged with regulating banks and ensuring the stability of the financial system. Consequently, starting in 2008 and continuing for several subsequent years, the Fed was on the front lines of combating interconnected crises in the banking system and the real economy.

In its war on the crisis, the Fed has deployed a wide range of tools including the traditional tricks of monetary policy plus a range of unconventional measures. It's been in the public eye as never before, and been subjected to an unprecedented level of political criticism.

The Fed's main tactics were:

• Interest rate cuts
• Targeted assistance to ailing financial institutions
• Quantitative easing (or Large-Scale Asset Purchases)
• Forward guidance about interest rates

The Federal Reserve responded aggressively to the financial crisis that emerged in the summer of 2007, including the implementation of a number of programs designed to support the liquidity of financial institutions and foster improved conditions in financial markets. These programs led to significant changes to the Federal Reserve's balance sheet.

Three major Programs are :

1.The first set of tools, which are closely tied to the central bank's traditional role as the lender of last resort, involve the provision of short-term liquidity to banks and other depository institutions and other financial institutions. The traditional discount window falls into this category, as did the crisis-related Term Auction Facility (TAF), Primary Dealer Credit Facility (PDCF), and Term Securities Lending Facility (TSLF). Because bank funding markets are global in scope, the Federal Reserve also approved bilateral currency swap agreements with several foreign central banks. The swap arrangements assist these central banks in their provision of dollar liquidity to banks in their jurisdictions.

2.  Second set of tools involved the provision of liquidity directly to borrowers and investors in key credit markets. The crisis-related Commercial Paper Funding Facility (CPFF), Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), Money Market Investor Funding Facility (MMIFF), and the Term Asset-Backed Securities Loan Facility (TALF) fall into this category.

3. Third set of instruments, the Federal Reserve expanded its traditional tool of open market operations to support the functioning of credit markets, put downward pressure on longer-term interest rates, and help to make broader financial conditions more accommodative through the purchase of longer-term securities for the Federal Reserve's portfolio.

2. Hypothetical question

I am not agree with both ways of appoinment. My opinion is, the present system of appoinment is more reliable and more decentralized. So, i am favor present method.

• It is clear, efficent and ethical channel of appoinment.
• The present system provide high priority is protecting consumer.
• The present system act as seperate from government, so the chance of political baises is less.

Present

The Federal Reserve System was established in 1913 when Congress passed the Federal Reserve Act. Although the Fed is independent of the government, it is ultimately accountable to Congress because Congress can amend the Federal Reserve Act at any time. Its actions, however, do not require any kind of approval from the government.

The Fed is called a "decentralized" central bank, which in itself seems to be a contradiction. It works, however, because the Fed is uniquely structured to eliminate government control but still remains accountable to both the government and the public. The Board represents the interests on the government side, and the regional Reserve Banks (whose boards of directors consist of local citizens) represent the interests of the private side. In order to operate independently of the government, the Fed finances its own operations.

The Board of Governors

The Fed has a seven-member Board of Governors and 12 regional Reserve Banks. The U.S. president appoints (and the Senate confirms) the seven Governors, whose 14-year terms are staggered to prevent a single president from being able to appoint too many governors. The chairman of the Federal Reserve, who serves a four-year term, is also appointed by the president

Reference

• Mathew (2015);The Fed and the 2008 financial crisis. Yglesias@[email protected].
• The Federal Reserve's response to the financial crisis and actions to foster maximum employment and price stability. (February 23, 2017) .
• Frederic S. Mishkin, (2014); Unprecedented Actions: The Federal Reserve’s Response to the Global Financial Crisis in Historical Perspective.
• http://www.dallasfed.org/assets/documents/institute/wpapers/2014/0209.pdf.

• Federal Reserve Board ,Home - www.federalreserve.gov

• Board of Governors of the Federal Reserve System - www.federalreserve.gov › aboutthefed › structure-feder.

Thank you.....