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Rita Anderson
Personal Finance
22 July, 2017
Federal Reserve
The U. S. Banking System is unique because that banking institutions were chartered, supervised
and regulate at both state and federal level. Moreover, a key importance of the bank system also
was the very large number of very small banks. Another import feature are that U.S. Banks
system had more limited authority to provide securities. In fact, most of the money stock of the
country is bank money; the rest of the currency is legal lender issued by the government,
II. Why are banks one of the most regulated and examined (audited) industries in the U.S.?
Bank industries need to show critical perspective and transparency focusing on the nuances and
boundaries. Banking audited regulation originates from microeconomic concerns over the ability
of bank creditors (depositors) to monitor the risk originating on the lending side and from micro
and macroeconomic concerns over the stability of banking system in the case of the a bank crisis.
In assertion to statutory and administrative regulatory provisions, the banking sector has been
subject to widespread informal regulation, i.e., the governments use of its discretion, outside
III. What is the Federal Reserve Bank and how and how is it organized?
The Federal Reserve Bank is the central Bank of the United States. It performs five general
functions to promote the effective operation of the U.S. economy and, more generally, the public
Foreign banking organizations have had a long-standing presence in the United States. Their
operations encompass a wide variety of banking and nonbanking activities, through subsidiaries,
branches, agencies, and representative offices. These activities are located primarily in the major
U.S. cities where finance and international trade are most actively conducted. The Federal
Reserve regularly examines the U.S. operations of foreign banks and plays a key role in
assessing the condition of an organization's entire U.S. operations and the foreign banking
The Federal Reserve shares its foreign banking organizations regulatory responsibility with other
state and federal supervisory authorities. Branches of foreign banking organizations are licensed
by the state banking authorities or the Office of the Comptroller of the Currency (OCC),
although certain grandfathered branches may be insured by the Federal Deposit Insurance
When the organization committee shall have established Federal reserve districts as provided in
section two of this Act, a certificate shall be filed with the Comptroller of the Currency showing
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the geographical limits of such districts and the Federal reserve city designated in each of such
districts. The Comptroller of the Currency shall thereupon cause to be forwarded to each national
bank located in each district, and to such other banks declared to be eligible by the organization
committee which may apply therefor, an application blank in form to be approved by the
organization committee, which blank shall contain a resolution to be adopted by the board of
directors of each bank executing such application, authorizing a subscription to the capital stock
of the Federal reserve bank organizing in that district in accordance with the provisions of this
Act.
A. General Purposes
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Promote the effective operation of the U.S. economy and, more generally and the public interest.
General Purposes
promotes the stability of the financial system and seeks to minimize and contain
systemic risks through active monitoring and engagement in the U.S. and abroad;
promotes the safety and soundness of individual financial institutions and monitors
fosters payment and settlement system safety and efficiency through services to the
banking industry and the U.S. government that facilitate U.S.-dollar transactions and
payments; and
focused supervision and examination, research and analysis of emerging consumer issues
B. Specific Purposes
1. supervising and examining state member banks (state-chartered banks that have
chosen to become members of the Federal Reserve System), bank and thrift holding
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companies, and nonbank financial institutions that have been designated as systemically
3. providing key financial services that undergird the nation's payment system, including
distributing the nation's currency and coin to depository institutions, clearing checks,
operating the Fed Wire and automated clearinghouse (ACH) systems, and serving as a
4. examining certain financial institutions to ensure and enforce compliance with federal
consumer protection and fair lending laws, while also promoting local community
development.
Monetary policy is the Federal Reserve's actions, as a central bank, to achieve three goals
specified by Congress: maximum employment, stable prices, and moderate long-term interest
The Federal Reserve conducts the nation's monetary policy by managing the level of short-term
interest rates and influencing the availability and cost of credit in the economy. Monetary policy
directly affects interest rates; it indirectly affects stock prices, wealth, and currency exchange
rates. Through these channels, monetary policy influences spending, investment, production,
The tools of Monetary policy is the Federal Reserve's actions, as a central bank, to achieve three
goals specified by Congress: maximum employment, stable prices, and moderate long-term
The Federal Reserve conducts the nation's monetary policy by managing the level of short-term
interest rates and influencing the availability and cost of credit in the economy. Monetary policy
directly affects interest rates; it indirectly affects stock prices, wealth, and currency exchange
rates. Through these channels, monetary policy influences spending, investment, production,
The Federal Reserve has a variety of policy tools that it uses in order to implement monetary
policy.
Discount Rate
Reserve Requirements
The Federal Reserve System Purposes & Functions details the structure, responsibilities, and
aims of the U.S. central banking system. The Federal Reserve System performs five functions to
promote the effective operation of the U.S. economy and, more generally, to serve the public
interest. It includes three key entities: the Board of Governors, 12 Federal Reserve Banks, and
The Federal Reserve performs five key functions in the public interest to promote the health of
the U.S. economy and the stability of the U.S. financial system.
The Board of Governors, the Federal Reserve Banks, and the Federal Open Market Committee
work together to promote the health of the U.S. economy and the stability of the U.S. financial
system.
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The Federal Open Market Committee sets U.S. monetary policy in accordance with its mandate
from Congress: to promote maximum employment, stable prices, and moderate long-term
The Federal Reserve monitors financial system risks and engages at home and abroad to help
ensure the system supports a healthy economy for U.S. households, communities, and
businesses.
The Federal Reserve promotes the safety and soundness of individual financial institutions and
The Federal Reserve works to promote a safe, efficient, and accessible system for U.S. dollar
transactions.
The Federal Reserve advances supervision, community reinvestment, and research to increase
understanding of the impacts of financial services policies and practices on consumers and
communities.
Janet L. Yellen took office as Chair of the Board of Governors of the Federal Reserve System on
February 3, 2014, for a four-year term ending February 3, 2018. Dr. Yellen also serves as
Chairman of the Federal Open Market Committee, the System's principal monetary
policymaking body. Prior to her appointment as Chair, Dr. Yellen served as Vice Chair of the
Board of Governors, taking office in October 2010, when she simultaneously began a 14-year
term as a member of the Board that will expire January 31, 2024.
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Stanley Fischer took office as a member of the Board of Governors of the Federal Reserve
System on May 28, 2014, to fill an unexpired term ending January 31, 2020. He was sworn in as
Vice Chairman of the Board of Governors on June 16, 2014. His term as Vice Chairman expires
on June 12, 2018.
Class C directors shall be appointed by the Board of Governors of the Federal Reserve System.
They shall have been for at least two years residents of the district for which they are appointed,
one of whom shall be designated by said board as chairman of the board of directors of the
Federal reserve bank and as "Federal reserve agent." He shall be a person of tested banking
experience, and in addition to his duties as chairman of the board of directors of the Federal
reserve bank he shall be required to maintain, under regulations to be established by the Board of
Governors of the Federal Reserve System, a local office of said board on the premises of the
Federal reserve bank. He shall make regular reports to the Board of Governors of the Federal
Reserve System and shall act as its official representative for the performance of the functions
conferred upon it by this Act. He shall receive an annual compensation to be fixed by the Board
of Governors of the Federal Reserve System and paid monthly by the Federal reserve bank to
which he is designated. One of the directors of class C shall be appointed by the Board of
Governors of the Federal Reserve System as deputy chairman to exercise the powers of the
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chairman of the board when necessary. In case of the absence of the chairman and deputy
chairman, the third class C director shall preside at meetings of the board.
Fiscal Policy the federal government efforts to keep the economy stable by increasing or
decreasing taxes or government spending. One of the factors that helps determine the country's
economic direction is fiscal policy. The government uses fiscal policy to influence the economy
by adjusting revenue and spending levels. In the United States, both the executive and legislative
Fiscal policy is based on the theories of British economist John Maynard Keynes, which state
that increasing or decreasing revenue (taxes) and expenditures (spending) levels influences
inflation, employment and the flow of money through the economic system. Fiscal policy is
often used in combination with monetary policy, which in the United States is set by the Federal
Reserve, to influence the direction of the economy and meet economic goals.
The two main tools of fiscal policy are taxes and spending. Taxes influence the economy by
determining how much money the government has to spend in certain areas and how much
money individuals have to spend. For example, if the government is trying to spur spending
among consumers, it can decrease taxes. A cut in taxes provides families with extra money,
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which the government hopes they will turn around and spend on other goods and services, thus
Spending is used as a tool for fiscal policy to drive government money to certain sectors that
need an economic boost. Whoever receives those dollars will have extra money to spend and,
as with taxes, the government hopes that money will be spent on other goods and services. The
key is finding the right balance and making sure the economy doesn't lean too far either way.
Prior to the Great Depression in the 1920s, the U.S. government took a very hands-off approach
when it came to setting economic policy. Afterward, the U.S. government decided it needed to
Fiscal Policy is the use of government revenue and spending to influence the economy.
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Today's U.S. fiscal policies are tied into each year's federal budget. The federal budget spells out
the governments spending plans for the fiscal year and how it plans to pay for that spending,
such as through new or existing taxes. The budget is developed through a collaborative effort
The president will first submit a budget to Congress that sets the tone for the coming year's fiscal
policy by outlining how much money the government should spend on public needs, such as
defense and health care; how much the government should take in in tax revenues; and how
much of a deficit, or surplus, is projected. Congress then reviews the president's budget request
and develops its own budget resolutions, which set broad levels for spending and taxation. Once
those are approved, legislators start the appropriations process, which spells out where each
dollar will be spent. The president must sign those appropriations bills before they can be
enacted.
XII. What are the main driving forces of the U.S. economy?
We have to shift away from the past economic drivers of the economy (consumer spending and
investment and exports will be able to substitute for the consumer and housing.
Consumer,
Government
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Spending
cooperative or capital
investment
At the end of FY 2017 the gross US federal government debt is estimated to be $20.4 trillion,
Works Cited
https://www.federalreserve.gov/supervisionreg.htm
http://www.businessnewsdaily.com/3484-fiscal-policy.html
http://www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/mthTreasStmt_home.htm
http://www.usgovernmentdebt.us/
http://www.comstockfunds.com/default.aspx?act=Newsletter.aspx&category=MarketCommentar
y&newsletterid=1611&menugroup=Home
https://www.federalreserve.gov/econres/feds/files/2017061pap.pdf
http://www.internationalcompetitionnetwork.org/uploads/library/doc382.pdf
https://en.wikipedia.org/wiki/Bank_regulation
https://www.federalreserve.gov/