1. The Fed- the central bank of the U.S.
Federal Reserve Board
Congress created it in 1913 to regulate banks
Sets monetary policy
Raise and lower interest rates
Leads financial institutions to take actions
Seven member Board of Governors
Appointed by President
Confirmed by Senate

2. The Fed’s responsibility is to adjust the economy’s temp.
When the Fed raises the rate at which banks can borrow money, the econ. cools down.
It becomes more expensive to borrow money.
The Fed’s responsibility is to adjust the economy’s temp.

3. The Fed’s responsibility is to adjust the economy’s temp.
When the Fed lowers the rate at which banks can borrow money, the economy heats up.
It becomes ‘cheaper’ to borrow money.
The Fed’s responsibility is to adjust the economy’s temp.

4. In 1996, the Chairman of the Fed, Alan Greenspan, said that the stock market was showing “Irrational Exuberance.” The stock market in Tokyo, which was still open as he spoke fell 3%. Hong Kong close down 3%. Frankfurt and London fell 4%. The US markets opened down 2% at the start of trading the next day.
The Chairman has often been called ‘the most powerful person in Washington.’

5. “The Chairperson of the Federal Reserve Board has more power over the U.S. economy than does any other person, including the President.”

6. ASSIGNMENT
Write a one page essay in which you summarize the Federal Reserve Board
Include the following
Name and background of current Fed Chair
Name and background of one of the previous two Chairs
Why the Fed was created by Congress in 1913
Explanation of how the seven members of the Board of Governors maintain their political independence from Congressional and Presidential demands related to the economy
Description of the job of the 12 Federal Reserve Banks