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The organization of the Fed is roughly as follows:
  • Is split into 12 regional banks
  • Each regional bank manages the commercial banks in their region
  • Each of these 12 regional banks owns a pro-rata share in "the fed" as a whole, based upon the total reserves of the commercial banks in their region
  • Congress appoints the chairman of the fed and sets other policy
So from this we can gather:
  1. The commercial banks, indirectly own the fed (via their capitalization)
  2. Of the regions, numerically NY is really the only one that matters (super majority of ownership is in NY region)
  3. The fed functions as sort of a "banking interest group" a liaison between the commercial banks and govt.
  4. Although Congress appoints the chairman, and can set certain policies, it has no direct control over its day-to-day operations (interest rates, etc) - those come via consensus of the 12 regional banks + board