The Board of Governors, located in Washington, D.C., provides the leadership for the System. The board consists of the seven governors which serve 14-year, staggered terms to ensure stability and continuity over time. The chairman and vice-chairman are appointed to four-year terms and may be reappointed subject to term limitations.
Among the responsibilities of the Board of Governors are to guide monetary policy action, to analyze domestic and international economic and financial conditions, and to lead committees that study current issues, such as consumer banking laws and electronic commerce.
The Board also exercises broad supervisory control over the financial services industry, administers certain consumer protection regulations, and oversees the nation’s payments system. The Board oversees the activities of Reserve Banks, approving the appointments of their presidents and some members of their boards of directors. The Board sets reserve requirements for depository institutions and approves changes in discount rates recommended by Reserve Banks.
The Board’s most important responsibility is participating in the Federal Open Market Committee (FOMC), which conducts our nation’s monetary policy; the seven governors comprise the voting majority of the FOMC with the other five votes coming from Reserve Bank presidents.
Board members are also called to testify before Congress, and they maintain regular contact with other government organizations as well. The chairman reports twice a year to Congress on the Fed’s monetary policy objectives, testifies on numerous other issues, and meets periodically with the Secretary of the Treasury.
The Board funds its operations by assessing the Federal Reserve Banks rather than through Congressional appropriation. Its financial accounts are audited annually by a public accounting firm, and these accounts are also subject to audit by the General Accounting Office.