Chapter 15- Section 1 Flashcards
What does the Federal Reserve system do?
Provides financial services to the government, regulates financial institutions, maintains the payments system, enforces consumer protection laws, and conducts monetary policy.
In 1913, Congress created what?
The Federal Reserve system (“Fed”)
Commercial banks that are members of, and Hold stock in, the Fed
Member banks
The Federal Reserve system is privately owned. True or false?
True
Those chartered by the national government must belong to the Fed, what are they?
National banks
What banks have a choice of joining the Fed or not?
Thanks chartered by state governments
In 1935 Congress established what?
A board of governors for the Federal Reserve system
What is the board there to do?
To regulate and supervise, set general policies for Federal Reserve and number bangs to follow, regulates certain operations of state-chartered member banks, and conducts some aspects of monetary policy
How many independent equally powerful banks are in the Federal Reserve?
12
The Reserve banks are supervised by whom?
The federal reserve board in Washington DC
Who makes decisions about the growth of the money supply and the level of interest rates?
The Federal open market committee (FOMC)
Who is on the Federal open market committee?
Seven members from the board of governors, the president of the New York District Fed, and four district Federal Reserve Bank presidents who serve one-year rotating terms
FOMC is the Fed’s primary what?
Monetary policymaking body
How many advisory committees does the Fed have?
Three
What does the Federal Advisory Council do?
Provide advice on the Federal Reserve on matters concerning the overall health of the economy
What does the Consumer Advisory Council do?
Meets with the board three times a year on consumer credit laws
Who make up the Consumer Advisory Council?
Educators, consumer legal specialist, and representatives from consumer, and financial industry groups
What does the Thrift Institutions Advisory Council do?
Advises on matters pertaining to the thrift industry
All depository institutions-including commercial banks, savings banks, savings institutions, and credit unions must maintain what?
Reserves against their customers’ deposits
The Fed is responsible for monitoring the reserves of state-chartered member banks while the other federal agencies monitor what?
The reserves of nonmember banks and other depository institutions
What two key roles do bank reserves play?
Reserves cleared checks, and the Fed uses reserves to control the size of the money supply
Corporations that own one or more banks
Bank holding companies
Holding companies only banks can not do what?
Accept deposits or make loans
Why did Congress give the Fed power to regulate the activities of the holding companies?
So the companies cannot invade restrictions
What percent of all banking assets in the United States do foreign banks control?
20%
The fan has brought authority to supervise and regulate foreign banks. What does the Fed do?
Examining banks annually, and is also able to terminates domestic operations of foreign banks
The Fed _____ and _______ the international operations of United States member banks and holding companies
Authorizes; supervises
The merger and two or more banks requires the approval of whom?
Appropriate federal banking authority.
If the surviving bank is a state member bank who must approve the merger?
The Fed
If two national banks merge who approves it?
The Comptroller of the Currency and a Treasury Department official
If two nonmember state banks merged who approves it?
The FDIC
What other responsibilities does the Federal Reserve have?
Clearing checks, enforcing consumer legislation, maintaining currency and coins, and providing financial services to the government
Require sellers to make complete and accurate disclosures to people who buy on credit
Truth in Lending Act
The Fed has the authority to extend truth-in-Lending disclosures to millions of individuals who purchase or borrow from corporations, retail stores, automobile dealers, thanks, and lending institutions
Regulation Z
The paper component of the money supply, is made up of Federal Reserve notes
Currency
Metallic forms of money-such as pennies, nickels, dimes, quarters, and the new Sacagawea dollar coin
Coins produced by the Bureau of the Mint
What does the Fed do to coins or currency the are mutilated or cannot be used for other reasons?
Destroy the old money so it cannot be put back into circulation
