By Maxine Shapiro, KERA 90.1 commentator.
Dallas, TX – In a few minutes, Alan Greenspan and the Federal Reserve Board will make the statement of their assessment of the monetary health and growth of the country. Let's take a stroll back to civics class and find out simply, what is the Federal Reserve Board? I'm Maxine Shapiro with KERA Marketplace Middays.
First off, I would like to thank the Federal Reserve website for the following information: On December 23, 1913, an Act of Congress created the Federal Reserve System. It serves as the nation's central bank. There are also 12 Reserve Banks, located in major cities throughout the United States. The System consists of a seven-member Board of Governors. They're appointed by the President and serve for 14 years. The Chairman and Vice Chairman are designated by the President and confirmed by the Senate. They serve four-year terms. Reagan appointed Chairman Alan Greenspan in 1987. Two other presidents have reappointed him, the last being Clinton in 2000. Currently, there are two vacant seats on the seven-member board.
So what's taking place today? The FOMC, or Federal Open Market Committee, is gathering for one of their eight meetings scheduled throughout the year. The FOMC consists of 12 members: the seven member Board of Governors, the President of the Federal Bank of New York, and four remaining memberships which carry a one-year term, a rotating selection of presidents of the 11 other Reserve Banks. Sounds fair. This group "makes the key decisions affecting the cost and availability of money and credit in the economy." Hence, short-term interest rates. And after eleven cuts last year and an economy that's turned around, expectations are for a neutral stance today with a rise in interest rates by May.
Besides conducting monetary policy and maintaining stability of the financial systems, the Fed supervises and regulates banking institutions, with a fourth nebulous category that covers just about anything to do with financial services here and abroad. It's that simple! For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 PM.