Extra Credit (Spring 2006)

Special Topic: Fed Chair Ben Bernanke
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Federal Reserve Structure and Operations
Q: How are members of the Board of Governors appointed?
A: The Board of Governors of the Federal Reserve System is a federal government agency. The Board is composed of seven members, who are appointed by the president of the United States and confirmed by the U.S. Senate. The full term of a Board member is 14 years, and the appointments are staggered so that one term expires on January 31 of each even-numbered year. After serving a full term, a Board member may not be reappointed. If a member leaves the Board before his or her term expires, however, the person appointed and confirmed to serve the remainder of the term may later be reappointed to a full term.
Q: How are Fed boards of directors appointed?
A: Each Federal Reserve Bank is an incorporated institution with its own board of directors. The board consists of nine members representing three classes. Three Class A representatives are chosen from small, medium, and large banks. Three Class B representatives come from professions other than banking. These six people are elected by member banks in the district. The Board of Governors selects three Class C directors; one of these directors is chairman of the board, and another is deputy chairman. Class B and C directors cannot be officers, directors, or employees of a bank. Class C directors cannot be stockholders of a bank.