There are 12 Federal Reserve Districts (click to zoom)
Federal Reserve System
The Federal Reserve, commonly referred to as the Fed, is the central bank of the United States. The Fed is responsible for regulating the U.S. monetary system (i.e. how much money is printed, and how it is distributed), as well as monitoring the operations of holding companies, including traditional banks and banking groups. Broadly speaking, its mandate is to promote stable prices and economic growth.
The Federal Reserve exerts regulatory oversight in a few different ways:
Board of Governors: The national component of the federal reserve system is run by a seven-person Board of Governors, commonly called the Federal Reserve Board. This group is managed by a chairman (currently Ben S. Bernanke) and vice chairman (Donald L. Kohn). Its main responsibility is to guide monetary policy by coordinating with the Federal Open Markets Committee (FOMC) and regional reserve banks. Toward this end, the board organizes a wide range of research and analytical operations. The board is also charged with overseeing the U.S. government's system of payments; supervising the financial services industry, including approving bank presidents and setting requirements for the amount of cash banks must hold in reserve; and coordinating and overseeing the actions of regional reserve banks.
Federal Open Markets Committee: The FOMC is the Fed's primary monetary policymaking body. It consists of twelve members, including the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and the presidents of four other regional banks (who serve on a rotating basis). The FOMC typically meets eight times a year and is charged with assessing the economic and financial landscape and setting the "federal funds rate," the benchmark interest rate at which the Fed loans money to banks.
Reserve Banks: The federal reserve banking system encompasses twelve regional banks with twenty-five total branches. These banks are regional arms of the U.S. central bank that act as intermediaries between local banks and the U.S. reserve banking system. They store and distribute reserves, process checks and other forms of interbank payments, and generally supervise the operations of commercial banks in their region. Reserve banks have additional regulatory authority over the 38 percent of U.S. commercial banks (mainly larger banks, including all national banks) that are members of the Federal Reserve system. These banks are considered stockholders of their local reserve bank and thus are required to hold 3 percent of their total capital at that bank.
Amidst the financial crisis of 2008, the Fed sought to use policy statements and its control of interest rates to influence legislative policy and calm capital markets. Chairman Bernanke has also encouraged lawmakers to pass a plan aimed at stimulating liquidity in financial markets, and has supported moves by the U.S. Treasury to make money available to some failing U.S. financial institutions.
