The Federal Reserve Board of Governors
- The Federal Reserve is composed of 12 regional banks around the country and a central board of governors in Washington.
- The board of governors consists of seven members appointed by the president and confirmed by the Senate for 14-year terms. Two of these seats are now vacant.
- The Fed conducts the nation’s monetary policy; supervises and regulates banking institutions; and provides financial services to depository institutions, the U.S. government, and other entities.
The Federal Reserve System, the United States’ central banking system, is made up of 12 regional reserve banks and a seven-member board of governors. The Fed has five main functions: conduct U.S. monetary policy; foster financial system stability; advance individual banking institutions’ safety and soundness; help maintain a safe and efficient payment and settlement system; and support consumer protection and community development.
Board Members Serve Staggered Terms
the board’s role
The board of governors guides the Fed’s operations, seeing that it carries out the goals and responsibilities outlined for it in statute. It oversees how the 12 reserve banks located around the country examine and supervise financial institutions. It gives guidance on the financial services that reserve banks offer to depository institutions and the federal government. The board also approves reserve bank presidents and budgets, and it appoints three people on each reserve bank’s board of directors. All seven governors sit on the Fed’s Federal Open Market Committee, which makes monetary policy decisions that promote the economic goals of full employment and low, stable inflation.
Serving on the board
The president appoints and the Senate confirms each of the seven Fed governors to a term of 14 years. One term expires January 31 of each even-numbered year. This holds even if a member takes office after the term starts. In practice, governors have rarely served for full terms. When a member leaves office before a term expires, a new member is appointed and confirmed to finish the term. After serving out the rest of the term, that member is eligible to be appointed to a new 14-year term.
From among the seven governors, the president selects a chair and vice chair, who lead the board of governors, as well as a vice chair for supervision. The vice chair for supervision, created by the Dodd-Frank Act in 2010, leads the regulation and enforcement of banks and other financial institutions that the board supervises. Terms for these three positions last four years. Members may serve multiple terms as chair or vice chair, but their time on the board is limited to one 14-year term, plus any unexpired term they may have filled.
President Trump appointed Jerome Powell as chair, though Powell first took office as a governor during the Obama administration. President Trump also has appointed Richard Clarida as a governor and Fed vice chair; Randal Quarles as a governor and vice chair for supervision; and Michelle Bowman as a governor. President Obama appointed Lael Brainard as a governor. There are two vacant seats.
The Federal Reserve Act requires the president to choose governors with “due regard to a fair representation of the financial, agricultural, industrial, and commercial interests.” Each member of the board must come from a different Federal Reserve district, and at least one member must have community banking experience. Under the April 3 reinterpretation of Senate Rule XXII, nominations of board members are subject to a maximum of two hours of debate after the Senate has invoked cloture. The nomination to be board chair remains subject to up to 30 hours of post-cloture debate.
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