Jason Morris

Personal Finance 1050

The Federal Reserve

The Federal Reserve was created on December 23, 1913. It was created with

the intention to mitigate the financial crisis and panics that surrounded that time period.

Such events such as the great depression and great recession of 2008 have led to a

growth in power within the federal reserve. The three main reasons Congress enacted

the federal reserve was to maximizing employment, stabilizing prices, and moderating

long-term interest rates. However there is a plethora of reasons why the bank stands

today. These include; to address the problem of banking panics,to serve as the central

bank for the United States,to strike a balance between private interests of banks and

the centralized responsibility of government,to supervise and regulate banking

institutions,to protect the credit rights of consumers,to manage the nation's money

supply through monetary policy to achieve the sometimes-conflicting goals of

maximum employment stable prices, including prevention of either inflation or deflation

moderate long-term interest rates,to maintain the stability of the financial system and

contain systemic risk in financial markets,to provide financial services to depository

institutions, the U.S. government, and foreign official institutions, including playing a

major role in operating the nation's payments system,to facilitate the exchange of

payments among regions,To respond to local liquidity needs,To strengthen U.S.

standing in the world economy. 1

1 "FRB: Mission". Federalreserve.gov. November 6, 2009. Retrieved October 29, 2011.

 Board of Governors are appointed by the president along with public and private

banks thus the Federal Reserve contains both private and public components The

Federal Reserve System considers itself "an independent central bank because its

monetary policy decisions do not have to be approved by the President or anyone else

in the executive or legislative branches of government, it does not receive funding

appropriated by the Congress, and the terms of the members of the Board of Governors

span multiple presidential and congressional terms."2

2From "Who owns the Federal Reserve?", Current FAQs, Board of Governors of the Federal
Reserve System, at [2].