Question

Explain how the banking interest of large, medium and small businesses are represented on the Board of Directors of each reserve bank.

Answer 1

According to Section 4 of the Federal Reserve Act, each Reserve Bank of Federal (inclusive the Federal Reserve Bank of New York) will be operating under the supervision of a Board of Directors, in addition to the Board of Governors general supervision in Washington, D.C. The Board of Directors of Bank’s will include nine members, who are selected from outside the Reserve Bank. To assure representation of numerous economic elements in the district, the nine directors are required to be district's residents in which they serve. The directors will divided into three groups as: Class A, Class B, and Class C. The Class A are appointed by the member commercial banks of the Second District and they represent member banks of the district. Class B directors are also elected in the same manner however represent nonbanking interests such as agriculture, commerce, and industry. Class C directors will be elected by the Board of Governors and cannot be directors, employees, or stockholders of existing banks