Above, a still from the July 2021 FRONTLINE documentary "The Power of the Fed." Although the chair typically serves as the face of the Fed, the U.S. central bank's Board of Governors is composed of seven members with equal votes.
July 13, 2021
by
Paula Moura
Feb. 22, 2022, update: There are currently four members of the U.S. Federal Reserve Board of Governors: Jerome Powell, Lael Brainard, Michelle Bowman and Christopher J. Waller. President Joe Bidenannouncedlast November that he planned to nominate Powell, whose term as Fed chair officially ended this month, to another four-year term aschair, and to nominate Brainard as vice chair. Biden also announced three new nominees to the Fed board — Sarah Bloom Raskin, for vice chair of supervision, and Lisa Cook and Philip Jefferson as governors — following the resignations of Randal Quarles in November and Richard Clarida in January. None of those five positions has yet been confirmed. Read more about recent ethics changes at the Fed.
Jerome Powell, Janet Yellen, Ben Bernanke, Alan Greenspan: The chair of the Federal Reserve Board of Governors is the default face of the Fed — the one name the public typically knows. But the board is actually composed of seven members, all with equal votes.
What does the Fed board do? And where do its members come from? With the new FRONTLINE documentary The Power of the Fed looking at the U.S. central bank’s efforts to avert economic crisis when COVID-19 struck, here’s a companion primer on how the board is structured and who wields its power.
What is the Federal Reserve Board of Governors?
The Federal Reserve is the central bank of the United States. Its job is to promote employment and to keep inflation in check, primarily by raising and lowering short-term interest rates. The Federal Reserve System has three main entities: the Board of Governors, the Federal Open Market Committee (FOMC) and 12 member banks — with each of the latter representing a district of the U.S.
The Board of Governors supervises those 12 districts, deciding, for example, if two commercial banks can merge; if a bank can open up a new line of business; and how much money commercial banks should keep in their reserves to maintain a healthy economy.
All members of the board, or “governors,” also have a permanent seat on the FOMC, the body that sets U.S. monetary policy: raising or lowering interest rates, and deciding when to buy bonds from commercial banks, companies or other financial institutions.
Read more: What Do the Federal Reserve’s New Ethics Rules and Other Changes Mean?
In addition to the seven-member Board of Governors, the FOMC has five other voting seats, filled by presidents of the Federal Reserve Banks. When the FOMC meets, all seven governors and 12 district presidents convene, but only the seven governors and five of the 12 Federal Reserve Bank presidents have the right to vote. The president of the New York bank always votes; the others rotate.
How does someone make it onto the board?
Each of the board’s seven governors is appointed by the sitting U.S. president and confirmed by the Senate — either to a full 14-year term or to fill the remainder of an unexpired term. (By contrast, the 12 Federal Reserve regional bank presidents are chosen by search committee.) Board members have included economists, lawyers, scholars, private equity managers, and longtime public servants in the Fed or the Treasury.
Of the 109 governors appointed since the first board was officially sworn in, in August 1914, three have been African American and ten have been women.
Read more: 5 Things You May Not Know About Jerome Powell, Chair of the U.S. Federal Reserve
It’s not unusual that a Fed governor who served as chair under one administration is reappointed as chair by another; take Ben Bernanke, who was appointed by George W. Bush but became better known during the Obama years for the Fed’s economic stimulus in the wake of the 2008 financial crisis.
It’s hard to know when or if a potential governor turns down a nomination, but some appointees have been rejected by the Senate. One of the most famous cases is Peter Diamond, a Nobel Prize winner, professor at MIT and Obama appointee. The Republican-controlled Senate rejected Diamond in 2010, citing his background in labor economics instead of monetary policy. A majority-Republican Senate also rejected Trump appointees — most famously in 2020 Judy Shelton, a former Trump advisor who advocated for the return of the gold standard.
Does the chair have more power than the other governors?
That depends on whether you mean power or influence. On the position of chair, David Wessel, head of the Brookings Institute’s Hutchins Center on Fiscal and Monetary Policy, said, “His legal power is somewhat limited, but his actual power, in fact, is very strong, because what the chairman says usually prevails.” (Read more about Jerome Powell, the current chair.)
The board also has a vice chair and, most recently, a vice chair of supervision — an informal position that became official after Congress passed the Dodd-Frank Act, regulating banks following the 2008 credit crisis.
Board members can’t be fired over their policy opinions, only by “cause,” a legal term for breaking the law. They can be pressured publicly by members of Congress or by presidents, as when President Donald Trump complained about Powell increasing interest rates in December 2018.
Congress “can send signals, threatening to pass legislation … or making it known that Congress is unhappy about a particular decision. It’s an informal pressure, and there’s no guarantee the Fed will respond, but Congress does have the capacity to try to influence them,” said Sarah Binder, a professor of political science at George Washington University and co-author of The Myth of Independence: How Congress Governs the Federal Reserve.
Congress created the Fed in 1913 with the Federal Reserve Act and could potentially disband it, but doing so would take a lot of effort. Binder said Congress could pass laws effectively directing the Fed into action — setting a target employment rate, for example — but these would have to be signed by the U.S. president.
Do most governors stay for the entire 14-year term?
Terms were mandated to last up to 14 years to provide political independence, but governors usually stay less time — on average, about seven years. The longest-tenured governor was economist Menc S. Szymczak, who served from 1933 to 1961 and was reappointed twice.
If all governors finished out their terms, the current board would contain members nominated by President George W. Bush. But the longest-sitting governor currently on the board is Powell, appointed by President Barack Obama in May 2012. The only other Obama appointee is Lael Brainard, who joined the board in June 2014.
Those who come from academia often take leave from their teaching or research jobs to join the board for a few years. Others leave the board to go into the private sector.
“It turns out that, if you spend a couple of years on the Federal Reserve board, you can make a lot of money in the private sector when you leave,” Wessel said. “Some people leave to make money. That’s the temptation.” Congress last adjusted the board’s salaries in 2019, setting the chair’s annual pay at $203,500 and $183,100 for the other governors.
Read more:
Many governors join the board by finishing out the term of someone who left early; in this case, governors can be reappointed to another term. The last time a governor stayed a full term was Alan Greenspan, whose term expired in 2006. He was the only chair reappointed by four different presidents: Ronald Reagan, George H.W. Bush, Bill Clinton and George W. Bush.
For the positions of chair and vice chair, terms are four years. Chairs are often reappointed by an incoming president, but President Trump broke this informal tradition by not reappointing Obama’s pick, Janet Yellen, instead nominating the current chair, Powell.
Unless he chooses to leave early, Powell’s term as chair will end in 2022. President Biden’s first nomination to the Board of Governors will come this year, for the vice chair of supervision —a role experts imagine he will fill with someone tough on banks.
Who are the current governors?
Jerome Powell, board chair, age 68
Took office: 2012, appointed by PresidentObama; became chair in 2018, appointed by President Trump
Term ends: 2022, as chair; 2028, as governor
Read more about the current chair, who earned his law degree from Georgetown University and did not have a background as an economist.
Richard Clarida, vice chair, age 64
Took office: 2018, appointed by President Trump
Term ends: 2022, as vice chair and governor
Clarida was a professor of economics and international affairs at Columbia University for 30 years. He also worked as a top official in the U.S. Treasury under the George W. Bush administration and at the investment firm PIMCO.
Randal Quarles, vice chair for supervision, age 63
Took office: 2017, appointed by President Trump
Term ends: October 2021, as vice chair; 2032, as governor
A top Treasury official during the George W. Bush administration, Quarles founded the investment firm Cynosure Group with members of the Eccles family. Quarles is married to a relative of Marriner Eccles, the Fed chair from 1936 to 1948 for whom he Federal Reserve building in Washington, D.C., is named.
Update:Quarles submitted his resignation to the board on Nov. 8, 2021.
Michelle Bowman, governor, age 50
Took office: 2018, appointed by President Trump
Term ends: 2034
Before serving as the state bank commissioner of Kansas and the vice president of a Kansas bank, Bowman held various positions in the federal government, including director of congressional and intergovernmental affairs at the Federal Emergency Management Agency. She is a member of the New York Bar Association.
Lael Brainard, governor, age 59
Took office: 2014, appointed by President Obama
Term ends: 2026
Brainard was a top Treasury official under the Obama administration. She has worked as an associate professor of applied economics at MIT and at the consulting firm McKinsey & Company.
Christopher Waller, governor, age 62
Took office: 2020, appointed by President Trump
Term ends: 2030
Waller served as executive vice president and director of research at the Federal Reserve Bank of St. Louis from 2009 to 2020. Previously, he a chair of economics at the University of Notre Dame.
Open seat
There’s currently one open seat on the board of governors; Quarles could occupy it when his term as vice chair of supervision ends in October. Of the opening, Binder said, “The chair decisions matter a lot, but given the number of appointments that presidents have to make … the sixth or seventh seat on the board, with all the respect, to fill that spot is just much less important, politically and policy-wise, for the White House.”
In addition to streaming below,The Power of the Fedis available in FRONTLINE’sonline collection of documentaries, onthePBS Video Appand on FRONTLINE’sYouTubechannel.
This story has been updated to clarify how Federal Reserve regional bank presidents are chosen.
Paula Moura, Former Digital Reporter, FRONTLINE
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FAQs
Who are the 12 Federal Reserve bank presidents? ›
- 1914 - 1928 | Benjamin Strong Jr. Title: Governor of the Federal Reserve Bank of New York. ...
- 1928 - 1940 | George L. Harrison. ...
- 1941 - 1956 | Allan Sproul. ...
- 1956 - 1975 | Alfred Hayes. ...
- 1975 - 1979 | Paul A. ...
- 1980 - 1985 | Anthony M. ...
- 1985 - 1993 | E. ...
- 1993 - 2003 | William J.
The Board of Governors--located in Washington, D.C.--is the governing body of the Federal Reserve System. It is run by seven members, or "governors," who are nominated by the President of the United States and confirmed in their positions by the U.S. Senate.
What is the Federal Reserve Board called today? ›Board of Governors of the Federal Reserve System
The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system.
President Andrew Jackson announces that the government will no longer use the Second Bank of the United States, the country's national bank, on September 10, 1833. He then used his executive power to remove all federal funds from the bank, in the final salvo of what is referred to as the “Bank War."
Who owns most of the Federal Reserve? ›Federal Reserve Banks' stock is owned by banks, never by individuals. Federal law requires national banks to be members of the Federal Reserve System and to own a specified amount of the stock of the Reserve Bank in the Federal Reserve district where they are located.
Does the president control the Federal Reserve Board? ›The president is responsible for all of the Reserve Bank's activities, including monetary policy, bank supervision and regulation, and payments services. In addition, the president serves on the Federal Reserve's chief monetary policymaking body, the Federal Open Market Committee (FOMC).
What makes up the Federal Reserve Board? ›The Federal Reserve System performs five functions to promote the effective operation of the U.S. economy and, more generally, to serve the public interest. It includes three key entities: the Board of Governors, 12 Federal Reserve Banks, and the Federal Open Market Committee.
Do Federal Reserve Board members get paid? ›The average Federal Reserve Board of Governors salary ranges from approximately $70,000 per year for Technology Analyst to $197,787 per year for Economist.
Are there 14 members of the Federal Reserve Board? ›The Board consists of seven members who are appointed by the president of the United States and confirmed by the Senate.
How many blacks are on the Federal Reserve Board? ›| 2019 | 2020 | |
|---|---|---|
| Total Minorities3 | 14 | 18 |
| Black or African American | 11 | 12 |
| Hispanic or Latino | 2 | 4 |
| Asian | 1 | 1 |
Can members of the Federal Reserve Board be removed? ›
Reserve Bank FOMC members are subject to plenary removal and supervision by the Board of Governors, which tracks the default rule that an officer is subject to removal at will by the appointing official.
How many Federal Reserve Boards are there? ›Structure and Function
The 12 Federal Reserve Banks and their 24 Branches are the operating arms of the Federal Reserve System. Each Reserve Bank operates within its own particular geographic area, or district, of the United States.
Federal Reserve Chairs (Left to Right): Janet Yellen, Alan Greenspan, Ben Bernanke, and Paul Volcker.
How many directors are in each of the Federal Reserve bank? ›Federal Reserve Banks
Pursuant to the Federal Reserve Act, each of the 12 Reserve Banks is subject to the supervision of a nine-member board of directors (board). Directors are divided into three classes—Class C, Class B, and Class A—of three directors each.
| Woodrow Wilson | |
|---|---|
| Personal details | |
| Born | Thomas Woodrow WilsonDecember 28, 1856 Staunton, Virginia, U.S. |
| Died | February 3, 1924 (aged 67) Washington, D.C., U.S. |
| Resting place | Washington National Cathedral |
Global markets would also need some sort of economic direction from the U.S. The Fed manages the dollar — and as the world's leading currency, a void left by a Fed-less America could throw those markets into chaos with uncertainty about who's managing U.S. interest rates and the American economy.
How much gold is in the Federal Reserve? ›| Department of the Treasury Bureau of the Fiscal Service Status Report of U.S. Government Gold Reserve February 28, 2021 | |
|---|---|
| Summary | Fine Troy Ounces |
| Subtotal - Gold Coins | 73,829.500 |
| Total - Federal Reserve Bank-Held Gold | 13,452,810.545 |
| Total - U.S. Government Gold Reserve | 261,498,926.241 |
The U.S. central banking system—the Federal Reserve, or the Fed—is the most powerful economic institution in the United States, perhaps the world. Its core responsibilities include setting interest rates, managing the money supply, and regulating financial markets.
Who is the Fed accountable to? ›The Fed is an independent government agency but accountable to the public and Congress. The chair and Board of Governor's staff testify before Congress and submit a Monetary Policy Report twice a year. Independently audited financial statements and FOMC meeting minutes are public.
Where do Federal Reserve profits go? ›The Fed's income comes primarily from the interest on government securities that it has acquired through open market operations. After paying its expenses, the Federal Reserve turns the rest of its earnings over to the U.S. Treasury.
How much power does the President have over the Federal Reserve? ›
A president does appoint the majority of voting officials
Of the 19 total Fed officials, 12 at any given time serve on the Fed's rate-setting Federal Open Market Committee (FOMC), seven of which are the Fed's board of governors.
The seven members of the Board of Governors of the Federal Reserve System are nominated by the President and confirmed by the Senate. A full term is fourteen years. One term begins every two years, on February 1 of even-numbered years. A member who serves a full term may not be reappointed.
Does Congress control the Fed? ›The Federal Reserve System is considered to be an independent central bank. It is so, however, only in the sense that its decisions do not have to be ratified by the President or anyone else in the executive branch of the government. The entire System is subject to oversight by the U.S. Congress….
How long do people serve on the Federal Reserve Board? ›Typically, term limits for board members are spelled out in an organization's bylaws. For nonprofit organizations, BoardSource recommends two consecutive three-year terms. For for-profit corporate boards, the National Association of Corporate Directors (NACD) recommends board term limits of 10 to 15 years.
Which branch has the most African Americans? ›- Air Force.
- 48,532.
- Army.
- 102,428.
- More than 21 out of every 100 Soldiers are. Black / African American.
- Marine Corps 19,366. Navy.
- 57,637.
- 16.9% The percent of Black /
The Denver Mint robbery occurred on December 18, 1922, when five men hijacked a Federal Reserve Bank delivery truck outside the U.S.
What percentage of the Union was black? ›By the end of the Civil War, roughly 179,000 black men (10% of the Union Army) served as soldiers in the U.S. Army and another 19,000 served in the Navy.
Who owns the Reserve Bank? ›The Bank is a body corporate wholly owned by the Commonwealth of Australia. For more information see about the RBA.
Who is the most famous Fed chairman? ›Crissinger (1923-1927). Crissinger is the Fed chairman with the best stock market returns ever (on an annualized basis). The Dow Jones Industrial Average more than doubled in roughly four and a half years under Crissinger during the famous Roaring '20s.
Who is the best Fed chairman of all time? ›In the history of the Federal Reserve, the most revered chairmen are William McChesney Martin, Paul Volcker and Alan Greenspan. All gained their reputation by decisive monetary policy action at times when stock and bond markets did not want or expect them to act.
Who was the youngest Fed chairman? ›
At 35 years old, Warsh was the youngest appointment in the history of the Federal Reserve.
Who are the current members of the Monetary Board? ›- Felipe Medalla – BSP Governor and Chairman of the Monetary Board. Francisco G. Dakila, Jr. – ...
- Benjamin Diokno, Secretary of the Department of Finance.
- Antonio S. Abacan, Jr.
- V. Bruce J. Tolentino.
- Peter B. Favila.
- Anita Linda Aquino.
By law, the president nominates a Fed chair and the two vice chairs for four-year terms. They must be confirmed by the Senate for those positions in a vote distinct from their confirmation as members of the Fed Board of Governors. Jerome Powell was confirmed for a second four-year term as chair on May 12, 2022.
Are the 12 presidents of the Federal Reserve banks are appointed by Congress? ›The seven members of the Board of Governors of the Federal Reserve System are nominated by the President and confirmed by the Senate.
What are the 12 districts of the Federal Reserve? ›- 01-Boston.
- 02-New York.
- 03-Philadelphia.
- 04-Cleveland.
- 05-Richmond.
- 06-Atlanta.
- 07-Chicago.
- 08-St. Louis.
All seven board members of the Federal Reserve Board of Governors and five Federal Reserve Bank presidents direct the open market operations that sets U.S. monetary policy through their membership in the Federal Open Market Committee (FOMC).
How many Federal Reserve Bank presidents are there? ›The president of a Federal Reserve Bank is appointed for a term of five years. The terms of all 12 Reserve Bank presidents run concurrently, ending on the last day of February of years numbered 6 and 1 (for example, 2016 and 2021).
Can the president fire members of the Federal Reserve? ›The chair may serve multiple terms, pending a new nomination and confirmation at the end of each term, with William McChesney Martin as the longest serving chair from 1951 to 1970 and Alan Greenspan as a close second. The chairs cannot be dismissed by the president before the end of their term.
Can Congress control the Federal Reserve? ›Key Responsibilities
While Congress establishes key objectives the Fed must follow, the Fed generally works independently of the federal government to administer its core responsibilities.
The New York Federal Reserve district is the largest by asset value. San Francisco, followed by Kansas City and Minneapolis, represent the largest geographical districts. Missouri is the only state to have two Federal Reserve Banks (Kansas City and St.
What is the largest federal reserve district? ›
Of the twelve Federal Reserve Districts, the Twelfth District is the largest by geography and the size of its economy.
How much money is in the US Federal Reserve? ›| Asset | 2019 | |
|---|---|---|
| 1 | Total | 129,479 |
| 2 | Gold stock1 | 11,041 |
| 3 | Special drawing rights2 3 | 50,749 |
| 4 | Reserve position in International Monetary Fund2 5 | 26,153 |
So is the Fed private or public? The answer is both. While the Board of Governors is an independent government agency, the Federal Reserve Banks are set up like private corporations. Member banks hold stock in the Federal Reserve Banks and earn dividends.