Board of Governors
At the core of the Federal Reserve System is the Board of Governors, or Federal Reserve Board. The Board of Governors, located in Washington, D.C., is a federal government agency that is the Fed's centralized component. The Board consists of seven members—called governors—who are appointed by the president of the United States and confirmed by the Senate. These governors guide the Federal Reserve's policy actions.
A governor's term is 14 years. The appointments to the Board are staggered—one term expiring every two years—to ensure stability and continuity in the group. The seven governors, along with a host of economists and support staff, help write the policies that make our banks financially sound and help formulate the policies that make our nation economically strong.
Governors actively lead committees that study prevailing economic issues—from affordable housing and consumer banking laws to interstate banking and electronic commerce. The Board also exercises broad supervisory control over certain state-chartered financial institutions, called member banks, as well as the companies that own banks. This control ensures that commercial banks operate responsibly and comply with Federal regulations and that the nation's payments system functions smoothly. In addition, the Board oversees the activities of Reserve banks, approving the appointments of their presidents and three members of the Reserve banks' boards of directors. Probably the Board's most important responsibility is participating on the Federal Open Market Committee (FOMC), the committee that directs the nation's monetary policy.
Heading the Board are a chairman and vice chairman, who are appointed by the U.S. president to serve four-year terms. The chairman of the Board of Governors has a highly visible position. Indeed, when the chairman speaks, Wall Street and the public listen!
The chairman reports twice a year to Congress on the Fed's monetary policy objectives, testifies before Congress on numerous other issues and meets periodically with the secretary of the Treasury. Other Board officials are also called to testify before Congress, and they maintain regular contact with other government organizations as well.
