Federal Reserve Board (FRB)

Federal Reserve Board (FRB): Role, Structure, and Duties

Key takeaways
* The Federal Reserve Board (Board of Governors) is the seven-member governing body of the Federal Reserve System, the U.S. central bank.
* Its statutory mandate is to promote maximum sustainable employment, stable prices, and moderate long-term interest rates.
* Members are presidential nominees confirmed by the Senate, serve staggered 14-year terms, and make monetary policy mostly independently of Congress and the executive branch.
* The Board participates in the Federal Open Market Committee (FOMC) and oversees supervision, regulation, and several policy tools.

What the Federal Reserve Board is
The Federal Reserve Board (FRB), formally the Board of Governors of the Federal Reserve System, is the central governing authority for the U.S. Federal Reserve. Created to provide balanced representation of the nation’s financial, agricultural, industrial and commercial interests, the Board sets broad policy and supervises the Federal Reserve System’s operations.

Structure and membership
* Seven governors appointed by the president and confirmed by the Senate.
* Terms are 14 years and staggered so a new appointment is expected about every two years. A member appointed to fill an unexpired term may later be reappointed to a full term.
* No two governors may come from the same Federal Reserve District.
* The president designates a Chair, Vice Chair, and Vice Chair for Supervision from among sitting governors; those leadership roles have separate four-year terms.
* Governors operate independently once appointed.

Mandate and how the Board works
The Board’s core mandate is to pursue maximum sustainable employment, stable prices, and moderate long-term interest rates. It carries out that mandate by:
* Setting policy and participating in the FOMC, which directs open market operations that influence the money supply and short-term interest rates.
* Adjusting other monetary policy tools (e.g., discount rate, interest on reserve balances, overnight reverse repurchase operations).
* Supervising and regulating banks and the Federal Reserve Banks.

Primary duties and responsibilities
* Monetary policy: As members of the FOMC, governors help set target interest rates and guide open market operations.
* Supervision and regulation: Oversight of bank holding companies, major financial institutions, and the Federal Reserve Banks’ activities to promote financial stability and safe banking practices.
* Payments and settlement systems: Policy and oversight to ensure the safety and efficiency of national payment, clearing, and settlement systems.
* Research and analysis: Producing economic research and staff analysis to inform policy decisions.
* Regional oversight: Supervising the 12 regional Federal Reserve Banks and coordinating systemwide activities.

Administration, ethics, and funding
* Principal offices are in Washington, D.C.; the Chair presides at Board meetings.
* Board expenses are funded primarily through assessments on Federal Reserve Banks.
* Governors are prohibited from holding positions or stock in banks or trust companies; they must certify compliance under oath.
* The Board includes subcommittees (e.g., supervision and regulation, economic and monetary affairs, financial stability) to manage its work.

Oversight and accountability
* The Federal Reserve is “independent within the government”: it makes policy independently but is accountable to Congress.
* Board officials—including the Chair and the Vice Chair for Supervision—regularly testify before congressional committees. The Vice Chair for Supervision is required to appear at semiannual hearings to discuss supervisory efforts and plans.

Removal and compensation
* Governors are removable by the president only “for cause” (e.g., neglect of duty, malfeasance).
* Compensation follows the federal Executive Schedule (the Chair is a Level I Executive Schedule position; governors hold Level II positions), with salaries set by statute.

Conclusion
The Federal Reserve Board is the central policy and supervisory authority of the U.S. central banking system. Through monetary policy decisions, supervision of the banking system, and oversight of payment and financial stability functions, the Board seeks to promote price stability, sustainable economic growth, and maximum employment while remaining accountable to Congress.