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THE POLICY MAKERS
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Chapters 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Chapter 1
General Economic Concepts
Chapter 2
What is Policy?
Chapter 3
History of Macroeconomic Policies in the United States
Chapter 4
Policy Goals: Maximum Employment
Chapter 5
Policy Goals: Maximum Production
Chapter 6
Policy Goals: Price Stability
Chapter 7
Policy Goals: External Balance
Chapter 8
Subsidiary Policy Goals
Chapter 9
Conflicting Policy Goals
Chapter 10
The Policy Makers
Chapter 11
The Policy Instruments
Chapter 12
The Decision-Making Processes
Chapter 13
The Policy Indicators
Chapter 14
The General Economic Model
Chapter 15
Monetarist Monetary and Fiscal Policies
Chapter 16
Keynesian Monetary and Fiscal Policies
Chapter 17
Debt Management Policies
Chapter 18
Incomes Policies
Chapter 19
Supply Management Policies
Chapter 20
The Long Wave
Chapter 21
Contemporary Issues
"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas."

John Maynard Keynes
British Economist
The General Theory of Employment, Interest and Money (1936)

  1. Introduction
  2. Federal Government
  3. Federal Reserve Bank System
  4. Other Independent Agencies and Commissions
  5. Summary
    Readings
    Websites
top    I. Introduction

Sometimes there is universal acceptance of one or another method of decision-making. Under 18th and 19th century liberal classicism, the rules and regulations were based on some "natural order;" that is, some natural harmony that would persist as long as individuals remained free to choose how to employ their means toward self-gratifying ends. Individuals were the principal decision-makers. There were no significant collective policies. The monarchs raised only enough tax revenue as was necessary to pay for wars and did not otherwise meddle in economic affairs.

Liberal classicism was a reaction to 17th-18th century mercantilism, in which the State was the principal decision maker. Although production remained principally in the hands of private entrepreneurs or mercantilists, under mercantilism, the rules and regulations permitted the State great latitude to intervene in individuals' decisions. The State could override individual decisions by, among other things, granting monopolies, setting production controls, and levying import duties (the means) to accumulate "treasure" of precious metals (the ends).

Today, the degree of rules and regulations varies from country to country depending, in part, on the goals of the system. In the Soviet Union and most of the socialist countries, prior to perestroika, the rules and regulations delegated most decision-making authority to the State. Such delegation was premised on an ideology of equitable distribution. The State owned the land and capital on behalf of its citizens and through a policy of national economic (material balance) planning, the citizens collectively determined what means (resources) would be used to produce what ends (goods and services). By also permitting the State to set prices, the citizens collectively determined the distribution of the output (the ultimate goal).

The biggest problem in the socialist systems was growth, which remained elusive. Consequently, in a few socialist countries, again, prior to perestroika, decision-making was split, in varying degrees, between individuals and the State, with the hope of realizing a higher rate of growth of real output for distribution. In Yugoslavia, the means of production were owned by "workers' councils," which determined how resources would be used and for what ends. In Poland, Hungary, and Romania, the decision-making locus for agricultural production was the farmers, while industrial production remained in the hands of the State. Since perestroika, most decision-making in these former socialist countries has been transferred to the people individually.

In the non-socialist countries, decision-making is just as diverse. Where a given distribution of income is the end (Sweden, in particular), the country has established only limited rules and regulations controlling individual decisions on production, but collectively, its government redistributes over 60% of the country's Gross Domestic Product (GDP) annually through an elaborate transfer payment system. In other countries, where both growth and income redistribution are primary goals (Austria, France, Italy, and the United Kingdom, in particular), the country's government has been active in employing resources for the production of goods collectively, especially in transportation, communication, health care, and goods for export. Where growth is the end (Japan and France, in particular), the State has established national councils to "guide" individuals in their voluntary decisions (indicative planning); but even these two countries differ on how production should proceed. In France, the State employs resources directly in the production of goods — from armaments to automobiles. In Japan, resources are directed by State subsidies and a system of financial networking, known as zaibatsus. Where stabilization of employment, output, and prices has been the primary concerns (the United States, in particular, and the United Kingdom and West Germany, to a large extent), the countries' governments have relied heavily on indirect demand management policies (monetary and fiscal policies) to offset deficiencies in individual efforts. At times, incomes policies — wage and price controls — have been tried.

In all cases, certain decisions are made individually within the policy structure; but the policy itself is a collective decision, usually delegated to government and its legitimate institutions. In the U.S., the Employment Act of 1946 states specifically that it is "the continuing policy and responsibility of the Federal Government...." In theory, the policy maker is "the government." But who and what is considered to be part of the government?

top    II. Federal Government

UNITED STATES GOVERNMENT

Executive Branch

Legislative Branch

Judicial Branch

President

                 Congress —————→ Independent Agencies
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Supreme Court

Treasury Department

Office of the Comptroller of the Currency

Office of Management and Budget

Office of the Trade Representative

Council of Economic Advisers

National Economic Commission (defunct)

National Economic Council

White House Staff

Special Committees

Special Agencies

Other Cabinet Depts.
House of Representatives

Appropriations Committee

Ways and Means Committee

Budget Committee

Financial Services Committee

Rules Committee
←→ Senate

Appropriations Committee

Finance Committee


Budget Committee

Banking, Housing, and Urban Affairs Committee

Rules and Administration Committee

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Federal Reserve
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Federal Deposit Insurance Corp.
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Office of Thrift Supervision
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National Credit Union Admin.
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Other Agencies:
SEC, FCA, FCC
FTC, VA, FHA
FDA, NRC, etc.
Courts of Appeal

District Courts
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Joint Committees
Joint Economic Committee
Joint Committee on Taxation

Congressional Budget Office

Government Accounting Office

The term "United States Government" covers the three branches of the federal government — the legislative branch, the executive branch and the judicial branch, the innumerable quasi-independent agencies acting on behalf of the branches of the federal government, plus each of the governments of the fifty (50) states and their quasi-independent agencies. The complex of public officials lumped together as "the government" is quite complicated. So complicated is this structure that, unlike theory, where formulation and execution are instantaneous, the real world decision-making process may be tedious and burdensome and often results in long-delayed snags in policy formulation and execution. For purposes of macroeconomic policies, however, the designation "United States Government" is confined to the three branches and the quasi-independent agencies of the federal government.

The Constitution allocates the power to make laws to the legislative branch, called Congress. It allocates the power to execute or administer these laws to the executive branch, called the Presidency. It allocates the power to adjudicate controversies arising from congressional legislation and the administration of the congressional laws and the Constitution to the judicial branch, called the judiciary or the court system.

The Legislative Branch

The legislative branch is the law-making body of the federal government. It is called Congress.

The Congress

The Congress is divided into two houses — the House of Representatives and the Senate. Its membership totals 535, of which 435 are representatives, elected by constituents from districts drawn according to a census of the population, and 100 are senators, elected, at large — two from each state.

Congress gets its power to make laws from Article I, Section 8 of the Constitution. Article 8 gives Congress the power, inter alia, (a) to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the U.S., (b) to borrow money on the credit of the U.S., (c) to coin money, regulate the value thereof, and of foreign coin, and (d) to make all laws which shall be necessary and proper for carrying into execution the foregoing powers and all other powers vested by this constitution in the government of the U.S. or in any department or officer thereof. Thus, in a fundamental sense, Congress holds the power to make macroeconomic policy. Through broad directives or through detailed specifications, Congress can legislate what is to be implemented by the executive branch.

In some areas, Congress has seen fit to delegate its power almost entirely to an "independent" agency or commission like the Federal Reserve Board of Governors or the Federal Home Loan Bank Board. In others, such as tax and expenditure policies, Congress clings firmly to its power to legislate in detail. And even though Congress may delegate some legislative powers, it can, at any time, revoke the delegation of authority and undertake directly the policy-making involved.

Congressional Committees

Most of the work on policy issues is accomplished behind the scenes — in committees and subcommittees — in a very decentralized fashion. For macroeconomic policy, at least twelve Congressional committees — 5 in the House, 5 in the Senate, the Joint Budget Committee, and the Joint Economic Committee, plus the Congressional Budget Office, occupy strategic positions.

Senate Appropriations Committee and House Appropriations Committee are responsible for budgetary allocations and approval for federal spending. Each appropriations committee has several subcommittees which are individually responsible for some "functional" portion of the federal budget, for example, defense spending. Each subcommittee tends to be headed by a politically powerful chairman, whose primary concern is his own domain and not the need to control aggregate government spending relative to tax receipts.

Senate Finance Committee and the House Ways and Means Committee are responsible for handling tax related matters and for the approval for levying taxes. All tax legislation must originate in the House and go, first, through the Ways and Means Committee. Without the support of the Chairman of the Ways and Means Committee, tax legislation has virtually no chance of getting to the House floor for a vote. With his support, however, very few tax bills have failed to be enacted.

Senate Budget Committee and House Budget Committee are responsible for determining the overall level of budget income and expenditure and for "balancing", to the best of its ability, receipts and expenditures.

Senate Banking, Housing, and Urban Affairs Committee and House Financial Services Committee are responsible for all monetary and banking legislation. These committees pull the strings behind monetary policy by holding hearings on Federal Reserve Board policy and operations and on the role of money and monetary institutions in the economy. They are also concerned with the regulation of financial institutions, housing legislation and mortgage credit, and the treasury's handling of the national debt.

Senate Rules and Administration Committee and House Rules Committee determine what legislation can go to the floors of the respective houses. They set the agendas for the Senate and House, respectively, and determine what bills will be reported out, when they will be reported out, and under which terms they will be debated. If the chairman of a Rules Committee does not like an appropriations or tax bill, he can kill it by putting it way down on the agenda, or by restricting debate (or, conversely, by allowing unlimited debate, depending on his views and congressional sentiment). The rules for debate can be tailored such that a bill will be doomed to pass or fail.

In addition, there are several non-legislative joint committees that are made up of members from both houses of Congress. These committees are primarily responsible for ironing out differences in House and Senate versions of the same bill. One such committee, the Joint Economic Committee, established by the Employment Act of 1946, provides a forum for consideration of both macro and microeconomic issues. It acts mostly in an advisory capacity, and its advice has had more or less influence on Congressional action depending upon the charisma of the chairman.The other joint committee involved in making fiscal policy decisions is the Joint Committee on Taxation.

Congressional Budget Office

The Congressional Budget Office (CBO), established by the Budget Reform Act of 1974, is a nonpartisan research organization, staffed by civil servants, that keeps Congress apprised of the state of the economy, provides Congress with forecasts of economic activity, and runs studies on the impact of public policy measures on the economy. It has no direct decision-making power, but rather provides the empirical and technical support for congressional decisions.

Government Accounting Office

The Government Accounting Office (GAO), headed by the Comptroller General, has no decision-making authority per se. Its power lies in its post-audit activities of the agencies and their expenditures. It is responsible for uncovering any kind of irregularities or corruption in the agencies' use of funds.

In 1985, Congress attempted to delegate official decision-making authority to the Comptroller General when it enacted the Gramm-Rudman-Hollings (Balanced Budget and Emergency Deficit Control) Act. Under the Gramm-Rudman Act, Congress and the President were required to reach agreement on maximum deficits for the annual federal budget. If these targeted budget deficits were met each year, for five years, the deficit was to disappear. If Congress and the President failed to reach agreement on the particular annual deficit target set by the Act, then the Comptroller General was empowered to make the necessary across-the-board spending cuts that would force the budget deficit into line with the Gramm-Rudman targets.

Subsequently, that transfer of power by Congress to the GAO was declared unconstitutional by the Supreme Court, but the fact that the Comptroller General was cited would have raised him to a prominent position in the decision-making process. The Supreme Court's decision raises more than a few questions concerning the transfer of congressional powers to quasi-independent agencies such as the Federal Reserve. To date, however, no other challenges to this sort of abdication by Congress are pending in the courts.

GAO to Audit Federal Reserve

The Executive Branch

The Executive Branch is the administrative body, empowered to carry out the laws passed by Congress.

The President

The Constitution allocates to the The President and the executive branch the power to execute congressional legislation. The President's role is, by law, administrative. However, as leader of his party and of the entire government, he is in a strategic position to propose and press for specific legislation. In the post-World War II period, he and his office have become the nation's principal analysts of the need for fiscal expansion or contraction for the economy and the foremost proponent of legislation to meet these ends. The executive branch, however, extends beyond the President to include many departments, agencies, and individuals who are instrumental in informing and advising the President on the state of the economy and the appropriate policies to be pursued.

Treasury Department

The Treasury Department (DOT), headed by the Secretary, a member of the President's cabinet, is primarily responsible for raising the funds that Congress so liberally spends — partly through tax collections (the Internal Revenue Service is housed in the Treasury Department) and partly through borrowing to finance annual budget deficits. The Secretary normally acts as the President's representative on tax issues and has a major role in proposing new taxes, in altering existing tax rates, and in preparing tax bills for the President to present to Congress. Working with the tax committees in Congress, the DOT Secretary helps to map out detailed provisions for tax legislation. When tax revenues are not sufficient to cover expenditures, the Secretary must determine the timing of Treasury auctions and the maturity on the securities (debt management).

In addition, DOT controls the gold stock and foreign exchange operations and oversees representative appointments to international financial agencies like the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (the World Bank). Therefore, the Secretary of DOT has substantial power in formulating and carrying out international as well as domestic policies.

Office of the Comptroller of the Currency

The Office of the Comptroller of the Currency (OCC), a division of the Treasury Department, was established as part of the National Bank Acts of 1863/1864 to charter and supervise nationally (federally) chartered commercial banks and mutual savings banks. It also passes on proposed mergers and consolidations and proposed changes in banks' capital requirements.

Office of Management and Budget

The Office of Management and Budget (OMB), formerly the Bureau of the Budget, was established pursuant to Reorganization Plan No. 1 of 1939. In general, it evaluates, formulates, and coordinates management procedures and program objectives within and among Federal departments and agencies, and it also controls the administration of the Federal budget, while routinely providing the President with recommendations regarding budget proposals and relevant legislative enactments. More specifically, the Office's primary functions are:
  1. to assist the President in developing and maintaining effective government by reviewing the organizational structure and management procedures of the executive branch to ensure that the intended results are achieved;

  2. to assist in developing efficient coordinating mechanisms to implement Government activities and to expand interagency cooperation;

  3. to assist the President in preparing the budget and in formulating the Government's fiscal program;

  4. to supervise and control the administration of the budget;

  5. to assist the President by clearing and coordinating departmental advice on proposed legislation and by making recommendations effecting Presidential action on legislative enactments, in accordance with past practice;

  6. to assist in developing regulatory reform proposals and programs for paperwork reduction, especially reporting burdens of the public;

  7. to assist in considering, clearing, and, where necessary, preparing proposed Executive orders and proclamations;

  8. to plan and develop information systems that provide the President with program performance data;

  9. to plan, conduct, and promote evaluation efforts that assist the President in assessing program objectives, performance, and efficiency;

  10. to keep the President informed of the progress of activities by Government agencies with respect to work proposed, initiated, and completed, together with the relative timing of work between the several agencies of the Government, all to the end that the work programs of the several agencies of the executive branch of the Government may be coordinated and that the moneys appropriated by the Congress may be expended in the most economical manner, barring overlapping and duplication of effort; and

  11. to improve the economy, efficiency, and effectiveness of the procurement processes by providing overall direction of procurement policies, regulations, procedures, and forms.
Office of the Trade Representative

The Office of the Trade Representative (OTR) was originally created as the Office of the Special Representative for Trade Negotiations by an Executive Order to direct all trade negotiations of and formulating trade policy for the United States. The Office is headed by the United States Trade Representative, a Cabinet-level official with the rank of Ambassador, who is directly responsible to the President. There are three Deputy United States Trade Representatives, who also hold the rank of Ambassador, two located in Washington and one in Geneva. The Chief Textile Negotiator and the Uruguay Round Coordinator also hold the rank of Ambassador. The United States Trade Representative serves as an ex officio member of the Boards of Directors of the Export-Import Bank and the Overseas Private Investment Corporation, and serves on the National Advisory Council for International Monetary and Financial Policy.

The Trade Act of 1974 officially established the Office as an agency of the Executive Office of the President charged with administering the trade agreements program under the Tariff Act of 1930, the Trade Expansion Act of 1962, and the Trade Act of 1974. Other powers and responsibilities for coordinating trade policy were assigned to the Office by the Trade Act of 1974 and by the President in an Executive Order in 1975. Reorganization Plan No. 3 of 1979 charged the Office with responsibility for setting and administering overall trade policy. It also provides that the United States Trade Representative shall be chief representative of the United States for:
  1. all activities concerning the General Agreement on Tariffs and Trade (GATT);

  2. discussions, meetings, and negotiations in the Organization for Economic Cooperation and Development (OECD) when such activities deal primarily with trade and commodity issues;

  3. negotiations in the United Nations Conference on Trade and Development (UNCTAD) and other multilateral institutions when such negotiations deal primarily with trade and commodity issues;

  4. other bilateral and multilateral negotiations when trade, including East-West trade, or commodities is the primary issue;

  5. negotiations under sections 704 and 734 of the Tariff Act of 1930; and

  6. negotiations concerning direct investment incentives and disincentives and bilateral investment issues concerning barriers to investment.
The Omnibus Trade and Competitiveness Act of 1988 codified these prior authorities and added additional authority, including the implementation of section 301 actions (regarding enforcement of U.S. rights under international trade agreements).

Council of Economic Advisers

The Council of Economic Advisers (CEA) was established under the Employment Act of 1946 to assist the President in formulating and implementing appropriate policies and strategies for achieving the goals of the Act. It is composed of three members, appointed by the President, with the advice and consent of the Senate, and one of the members is designated by the President as Chair. The Council has no official decision-making authority. Its primary duty is to analyze economic trends and make forecasts for the purpose of providing policy recommendations to the president. In particular, the Council is charged with the following duties:
  1. analyzing the national economy and its various segments;

  2. advising the President on economic developments;

  3. appraising the economic programs and policies of the Federal Government;

  4. recommending to the President policies for economic growth and stability;

  5. assisting in the preparation of the economic reports of the President to the Congress; and

  6. preparing the Annual Report of the Council of Economic Advisers (Economic Report of the President).
The President's use of the Council is discretionary. He has the option of relying or not relying on the Council's suggestions. Different President's have made different use of the Council. Over the years, the effectiveness of the Council has tended to vary directly with the charisma of its Chair and indirectly with the charisma of the President.

National Economic Council

The National Economic Council (NEC) was established by President William J. Clinton during his first term in office (1992-1996) to facilitate the coordination of the Administration's economic policies. It consists of the Chair of the Council of Economic Advisers, the U.S. Trade Representative, and for all practical purposes, its mission is the same as that of the Council of Economic Advisers.

Other Executive Committees and Agencies

From time to time, the President may appoint such special committees or agencies as he sees fit for the purpose of carrying out his executive duties.

White House Staff consists of assistants to the President who advise and take part in the decision-making on domestic and international economic policy issues.

Special committees, such as, the Council on Wage and Price Controls, are established by the President for the purpose of reporting to him on special matters.

Special agencies, such as, the Federal Housing Administration, report on special needs in the economy.

Other Cabinet Departments, for example, Defense, Agriculture, Commerce, and Labor, and their respective secretaries and undersecretaries speak for their special interests.

The Judicial Branch

The Judicial Branch (or the judiciary) is a system of federal courts, from the Supreme Court down to the lower federal district courts, that is not active in decision-making, per se. Rather, the judiciary becomes active only through its interpretation of congressional legislation as cases are brought before the various courts in the system. Very often, after a court, especially the Supreme Court, rules on a case, Congress may be forced to rescind or amend a previous law.

Independent Agencies, Commissions, and Councils

PRIMARY FINANCIAL INSTITUTIONS REGULATORS
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State Commercial Banks
Comptroller of the Currency
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Federal Reserve Board of Governors
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Federal Reserve Bank System

Bank Holding Companies
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Edge Act Corps.
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Int'l Banking Facilities
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Federal Deposit Insurance Corp
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Deposit Insurance Fund
Office of Thrift Supervision
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Federal Home Loan Bank System
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Resolution Trust Corp (defunct)
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National Credit Union Admin
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National Credit Union Central Liquidity Facility
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National Credit Union Share Ins. Fund
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State Insurance Depts.
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Privately-owned Reinsurance Companies
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Reinsurance Companies
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Securities and Exchange Comm. and FINRA
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Securities Investors Protection Corp.
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Foreign Commercial Banks - Branches, Subsidiaries, Agencies, and Affiliates
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National and State Commercial Banks

Mutual Savings Banks
Savings and Loan Assns
(defunct)
Credit Unions Insurance Companies Brokerage Houses

Investment Banks
(defunct)
U.S. Gov't Securities Dealers

Organized Stock Exchanges

Registration and Reporting by publicly-owned corps

Investment Advisers

SECONDARY FINANCIAL INSTITUTIONS REGULATORS
Federal National Mortgage Assn Government National Mortgage Assn Federal Home Loan Mortgage Corp Credit Union National Mortgage Corp Student Loan Marketing Assn

Independent agencies and commissions are "independent" in the sense that they are outside of the regular executive branch of government and do not answer directly to the President. However, since they are established by Acts of Congress, they are ultimately responsible to Congress for their powers, which can be easily expanded or restricted by new legislation. Generally, a multimember board is empanelled to administer regulatory rules or principles established by law and to pass on the actions of businesses or individuals under the act. Commissioners are generally given long terms of office, presumably to remove them from the day-to-day pressures of the political process. In many cases, bi-partisan appointments are required by law.

top    III. Federal Reserve Bank System

The most important independent agency is the Federal Reserve Bank System (FRBS). It was established by the Federal Reserve Act of 1913. here is a brief History of the Federal Reserve.

Purposes and Functions

The original purposes of the FRBS were to:
  1. provide a uniform currency;
  2. provide an "elastic currency" to prevent severe deflation;
  3. serve as a central repository for the reserves of the banking system;
  4. promote commercial bank liquidity and solvency;
  5. oversee commercial banking practices and credit creation; and
  6. act as fiscal agent for the U.S. Treasury by holding its checking account and by purchasing and selling its securities in the open market.
The current functions of the FRBS are to:
  1. conduct the nation's monetary policy by influencing the money and credit conditions in the economy in pursuit of full employment and stable prices;
  2. regulate and supervise banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect consumers' credit rights;
  3. maintain the stability of the financial system and contain systematic risk that might arise in financial markets; and
  4. provide certain financial services to the U.S. government, to the public, to financial institutions, and to foreign official institutions, including playing a major role in operating the nation's payments system.
As of 1980, under the Depository Institutions Deregulation and Monetary Control Act (DIDMCA), the FRBS is empowered to set reserve requirements for all depository institutions and, in return, all depository institutions are guaranteed access to the discount window.

The FRBS also administers Community Reinvestment Act of 1977 (CRA) which requires banks to meet the credit needs of their communities (Regulation BB). Each bank is assigned a services rating — "Outstanding", "Satisfactory", "Needs Improvement", or "Substantial Non-compliance" — depending upon how well it is meeting the credit needs of its entire community. These performance ratings are available to the public upon request to a specific bank or by searching the FRBS data base.

Structural Organization

See also The Structure of the Federal Reserve System.

Board of Governors

The original act provided for a seven-member Board in Washington, D.C., which included five private individuals appointed by the President with the consent of the Senate, the Secretary of the Treasury, and the Comptroller of the Currency. Board Members Since 1913. The original term of office was ten years, and the five original appointive members had terms of two, four, six, eight, and ten years respectively. In 1922 the number of appointive members was increased to six, and in 1933 the term of office was increased to twelve years.

The presence of the Treasury Secretary and the Comptroller tied the Board too closely to the Administration in power. The disadvantages of this tie were especially pronounced during World War I, and the years immediately following, when the Federal Reserve was forced to peg interest rates at artificially low rates to keep down the cost of Treasury borrowing for the war and its refinancing of this debt immediately thereafter. When the economy resumed its normal growth after the war and market rates of interest rose, the commercial banks who held much of the Treasury's war debt took huge capital losses on their U.S. securities holdings. However, banks do not vote for congress members and the prosperity of the 1920s pushed this disadvantage into the background.

Under the original act, the Board of Directors had very little power over the District Banks. In response to the banking crisis in 1933, Congress passed two Banking Acts, one in 1933 and one in 1935, which totally revamped the FRBS. The Act renamed the Board in Washington as the Board of Governors, eliminated the Treasury Secretary and Comptroller from the Board, and increased the number of board members to seven (7). The district bank board members were renamed as directors.

As of February 1, 1936, the FRBS is controlled by this 7-member Board of Governors (BOG). Each governor is appointed every two years by the President, with the consent of Congress, to serve a 14-year term. No governor may be reappointed at the end of a term. The length of the single term represents a political dichotomization. The term is set to overlap and exceed public administrative terms, so that the BOG is free to set policy independently of the current or any one administration. In addition, no two members may come from the same Federal Reserve district and the Board's representation must be cross-sectional with respect to financial, agricultural, industrial, and commercial interests. The BOG is ultimately responsible for FRBS operations and policy. A Chair and Vice Chair are appointed by the President to 4-year terms and may be reappointed within the 14-year limit.

Federal Reserve District Banks

The original Act provided for 8-12 districts, each with its own "central" bank. At the time the Act was passed, 12 districts were drawn and these 12 districts have remained in tact with minimal boundary changes. The District Banks are owned by the "member" commercial banks. "Member banks" are required to put up 6% of their own capital and surplus to capitalize the District Bank. However, unlike shareholders in a private corporation, the "member banks" are limited in their powers to elect the members of the Board of Directors.

Each District Bank is operated by a 9-member Board of Directors. The Board has a very unique structure with three classes of directors that is designed to represent all segments of the banking and economic systems: Class A directors must be three bankers (the "lenders"); Class B directors must be three individuals, one each from agriculture, industry, and commerce (the "borrowers"); and Class C directors are three individuals not to be related to or associated with commercial banking in any way (the "overseers"). Classes A and B are elected by the member banks according to bank size: small, medium, and large. This grouping and block voting prevents large banks from using their greater number of shares to dominate the Board. Class C directors are appointed by the BOG. The Chair must be from the Class C directors. Each branch bank of a District Bank has its own five- or seven-member board of directors. The majority (three or four, as the case may be) are appointed by the head-office directors, and the others by the BOG.

The District Banks are non-profit organizations that derive their earnings primarily from interest on their proportionate share of the System's holdings of securities acquired through open market operations and, to a much lesser extent, from interest on System holdings of foreign currencies and on their loans to depository institutions. Since 1981, the District Banks have also earned fees for providing various services to depository institutions. Pricing of Federal Reserve services was mandated by DIDMCA.

Earnings of the District Banks are allocated first to the payment of operating expenses (including an assessment by the BOG to defray its expenses), the statutory 6% dividend on Federal Reserve stock that member institutions are required to purchase, and any additions to surplus necessary to maintain each District Bank's surplus equal to its paid-in capital stock. Any profits after the above expenses have been paid are turned over to the Treasury. About 95% of the District Banks' net earnings have been paid to the Treasury since the FRBS was established. In 1983, net System earnings totaled $15.0 billion, of which $14.2 billion was paid to the Treasury. Should a District Bank be liquidated, its surplus — after all obligations have been met — would become the property of the U.S. government.

The purpose of districting was to satisfy those opponents of a central bank, who had always feared its control by northeastern industrial interests at the expense of small mid-west farmers. Decentralization of the FRBS sought to centralize control of the banking system, while providing for regional liquidity differences and local financing. Originally, the twelve district banks were free to set credit policy as regional demands dictated. Each District Bank had the power to set its own discount rate, subject to the BOG's approval. However, the Great Depression revealed that under the original legislation, the District Banks were either unwilling or unable to prevent financial and economic collapse. The Banking Acts of 1933/1935 centralized the regulatory powers in the BOG and strengthened the BOG's powers over total bank credit and the uses to which it could be put. The BOG is now responsible for all macroeconomic policy decisions. Since 1935, the discount rate has been effectively set by the BOG with recommendations by the District Banks.

In 1980, DIDMCA eliminated the distinction between member and non-member banks. Today, all banks are required to submit to Federal Reserve requirements (unless state requirements are more stringent) and to pay for Federal Reserve services, such as check clearing, on a fee basis. In exchange, all banks are allowed access to the Discount Window.

Federal Reserve Committees and Councils

The Federal Open Market Committee is the policy-making "arm" of the FRBS. It decides the stance of monetary policy and gives the directives to the Trading Desk concerning purchases and sales of U.S. government securities. In addition, the FOMC authorizes and directs operations in foreign exchange markets for major currencies. All members of the BOG and District Bank presidents attend the FOMC meetings. However, its voting membership consists only of the seven BOG members, the president of the Federal Reserve Bank of New York (FRBNY), and the presidents of four other District Banks. The president of the FRBNY always sits on the committee because the Trading Desk, where open market operations are conducted, is located at the New York district bank. The other presidents are selected to vote on an annually rotating basis. By statute the FOMC determines its own organization, and by tradition it elects the BOG Chair as its own Chair and the FRBNY president as its Vice Chairman. The BOG is ultimately responsible for monetary policy as developed by the FOMC.

The Federal Advisory Council is the public relations "arm" of the Federal Reserve. It acts as a liaison between the BOG and the banking community. It advises and recommends policy measures based on the state of the economy, but has no decision-making authority. It consists of one member, generally a prominent banker, from each district, selected by the Board of Directors of the district.

The Consumer Advisory Council is another statutory advisory group which usually meets with the BOG four times each year. The council has thirty members. Some represent the interests of the financial industry and consumers, and some are academic and legal specialists in consumer matters.

The Thrift Institutions Advisory Council was established by the Board of Governors after passage of DIDMCA in 1980. It is comprised of representatives of mutual savings banks (MSBs), savings and loan associations (S & Ls), and credit unions (CUs). The purpose of this group is to provide information and views on the special needs and problems of thrift institutions.

The Discount Rate Policy Group is composed of senior officers at the BOG in Washington. The purpose of this group is to review and assess the impact of current discount rate policy and policy alternatives on the financial markets and economic activity.

The Reserve Requirements Policy Group is composed of senior officers at the BOG in Washington. The purpose of this group is to review and assess the impact of current reserve requirements policy and policy alternatives on the financial markets and economic activity.

top    IV. Other Independent Agencies and Commissions

In addition to the Federal Reserve, there is a broad structure of financial institutions that affect monetary and fiscal outcomes in one or another ways.

Federal Financial Institutions Examination Council

The Federal Financial Institutions Examination Council (FFIEC) is composed of five members: The Comptroller of the Currency, the Chairman of the Federal Reserve Board of Governors, the Director of the Office of Thrift Supervision (defunct), the Chairman of the Board of Directors of the Federal Deposit Insurance Corporation, and the Director of the National Credit Union Administration. The Council was established in 1979, pursuant to title X of the Financial Institutions Regulatory and Interest Rate Control Act of 1978 (FIRA), Public Law 95-630. Its mission statement outlines its current tasks.

The Council determines which factors will serve as the bases for a composite rating of bank performance by the examining agencies and how these factors are to be evaluated. These factors are currently known as the CAMELS rating. Each bank is assigned a composite rating from "1" to "5" in the five categories of Capital Adequacy, Asset Quality, Management, Earnings Capacity, and Liquidity. These ratings are then summed, averaged, and rounded to the next lowest whole number. A "1" rating indicates the lowest level of supervisory control, while a "4" or "5" rating indicates a "problem" bank, one that is operating in an unsafe manner with a high probability of failure. Banks with a "1" rating get a "spot" audit once a year. Banks with a "2" rating get a complete audit once a year. Banks with a "3" rating get 2-3 audits per year. Banks with a "4" rating four (4) complete audits per year. If the bank has a "4" rating, the FDIC has the authority to close it. Banks with a "5" rating are automatically closed. These ratings are not available to the public.

Federal Deposit Insurance Corp.

The Federal Deposit Insurance Corp. (FDIC) was established in 1934, by the Banking Act of 1933, to insure deposits against the failure of member institutions. All nationally chartered banks and all state chartered banks who were members of the Federal Reserve were required to buy FDIC insurance. State chartered banks who were not members of the Federal Reserve had the option of buying it.

Structural organization The FDIC is headed by a 3-member Board of Directors. The two regular directors are appointed by the President to 6-year terms and the ex officio member is the Comptroller of the Currency. The chairman is generally one of the two regular directors. The agency is headquartered in Washington, D.C., with branch offices across the country.

Functions The FDIC is both an insurer and receiver. As an insurer, the FDIC can either make a "payout" of the amount of the insured deposit to the depositor directly or arrange for an "assumption" by a healthy bank of the assets and liabilities of the failed bank. As a receiver, the FDIC keeps the nonperforming assets of a failed bank and attempts to collect them. It also conducts regular bank examinations in tandem with the OCC, the FRS, and state banking departments.

Historical experience Initially, the FDIC insured only the deposits of commercial banks and MSBs and the maximum amount was $2,500 per account per account title. Over the years, the insured amount was raised, but not the premium. In 1980, with the passage of DIDMCA, the insured amount was raised to its present level of $100,000 per account per account title. The insurance premium was paid at a flat rate of $.06 per $100 of insured deposit and subsequently raised to $.125 per $100 of insured deposit.

During its first fifty years, the FDIC accumulated reserves at a very rapid rate. Few banks failed and the FDIC's pay-out rate was nominal. Usually, the FDIC could minimize its pay-outs by arranging for an assumption rather than paying the depositors directly. At the end of 1986, the FDIC held reserves of $18.8 billion including a $1 billion surplus for the year.

For a number of reasons, many commercial banks began to fail in the late 1980s. So many were failing that the FDIC had a difficult time finding healthy banks and arranging for assumptions in lieu of payouts. The FDIC quickly depleted its reserves and was literally on the verge of bankruptcy. To prevent a bankruptcy, Congress passed the Competitive Equality Banking Act of 1987 (CEBA), which allowed the FDIC to operate a failed bank until it could find a buyer. At the same time, the FDIC raised its premium assessment to $.21 per $100 of insured deposit.

Just prior to the problems with the FDIC, the Federal Savings and Loan Insurance Corporation (FSLIC), which provided similar insurance services to the S & L industry, failed. In 1989, Congress passed the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) to provide for a rescue of the S & L insurance fund. The Act vested responsibility for all deposit insurance in FDIC. The FDIC then created two funds to handle deposit insurance: two insurance funds: the Bank Insurance Fund (BIF) for commercial banks and MSBs and the Savings Association Insurance Fund (SAIF) for S & Ls. In 2006, the FDIC merged the two funds into one fund: the Deposit Insurance Fund.

In 1991, Congress sought further security for the safety and solvency of the FDIC with the passage of the Federal Deposit Insurance Act of 1991 (FIDA). The Act authorized $70 billion to bail out BIF and authorized the FDIC to assess risk-adjusted premiums on member banks, The FDIC assessed highly solvent, low-risk banks at a rate of $.21 per $100 of insured deposit, moderate-risk banks at a rate of $.23 per $100 of insured deposit, and high-risk banks at a rate of $.29 per $100 of insured deposit. This new assessment schedule raised the average premium to $.27 per $100 of insured deposit. The collection of these risk-adjusted assessments significantly increased the FDIC's reserves.

By 1995, the FDIC had reached the congressionally mandated reserve level of 1.25% of deposits and, the following year (1996), it dropped the per deposit rate assessment and adopted a flat rate assessment of $2,000.00 per bank. Some banks paid no fee. The FDIC still also had additional borrowing authority of $3 billion from the Treasury.

In 2006, the FDIC merged BIF and SAIF into the Deposit Insurance Fund (DIF). However, the combined reserve level was only 1.01% of deposits. This level was below the Designated Reserve Ratio (DRR) range of 1.15% to 1.50% established by Congress in the Federal Deposit Insurance Reform Act of 2005 (FIDRA). The FDIC reverted to risk-based assessments to rebuild its reserves.

FIDRA also raised the maximum amount of an insured "retirement" deposit to $250,000 per account per account title. However, due to the ensuing financial crisis in 2007-2010 and flagging faith in the U.S. banking system, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which, in part, permanently raised the current standard maximum deposit insurance amount (SMDIA) to $250,000. See also FDIC Law, Regulations, Related Acts.

Federal Home Loan Bank System

The Federal Home Loan Bank System (FHLBS), like the FDIC, was created as part of the New Deal Banking legislation and was headed by a 3-member board, each member appointed by the President to 4-year terms. The Federal Home Loan Bank System was structured just like the Federal Reserve System, with twelve districts and a cooperatively-owned Federal Home Loan Bank in each district. Similarly, it was established to function like a central bank for the S & L industry, providing "lender of last resort" facilities to the S & Ls. In addition, the FHLBS chartered federal S & Ls, conducted S & L examinations, and established minimum liquidity requirements for members.

Today, the FHLBS is operated by the 5-member Federal Housing Finance Board. Four board members are appointed by the President for 7-year terms, and the fifth member is the Secretary of the Department of Housing and Urban Development, or the secretary's designee. It has expanded duties to help finance the country's urban and rural housing and community development needs. It supports community-based financial institutions and facilitates their access to credit. Its membership base has expanded to include commercial banks, savings banks, and credit unions.

Office of Thrift Supervision and Resolution Trust Corporation

[NOTE: Office of Thrift Supervision was closed as of October 2010, and its functions were merged into the Office of the Comptroller of the Currency, after the last of the savings and loan associations was closed and merged into another financial institution.]

Background Prior to 1989, S & Ls were insured, like commercial banks, through a government-sponsored insurance company called the Federal Savings and Loans Insurance Corporation (FSLIC). FSLIC oversaw assumptions or payouts to depositors of failed S & Ls and conducted S & L examinations. It covered its expenses with a fee levied on member S & Ls at a rate of $.083 per $100 of insured deposits. FSLIC also had the authority to impose supplemental fees to compensate for increased expenses and costs of bailouts. In 1985, FSLIC raised its fee to $.125 per $100 on insured deposits. Unfortunately, this increase was too little too late. Given the increasing number of S & L failures in the mid-1980s, FSLIC's reserves dwindled to only $2 billion by the end of 1986. By year-end 1987, FSLIC had negative net worth of $17-18 billion. And, by December 1988, economists and politicians were estimating that $50-$100 billion would be required to solve the current S & L crisis.

Instead of bailing out FSLIC, Congress passed FIRREA. The Act abolished FSLIC and the FHLBS and created, in lieu, two new institutions: the Office of Thrift Supervision (OTS) and the Resolution Trust Corporation (RTC). The role of the OTS was to supervise and enforce savings and loan regulations in place of the FHLBS, and the role of the RTC was to handle liquidation of failed institutions' assets in place of the FSLIC.At the same time, the FDIC was authorized to provide insurance to qualified S & Ls through SAIF. Subsequently, the salvageable assets of the failed S & Ls were liquidated and the RTC was dissolved.

Structural organization The OTS is a bureau of the Department of Treasury with five regional offices located in Jersey City, Atlanta, Chicago, Dallas, and San Francisco. It has five organizational areas:
  • Supervision is responsible for the examination and supervision of thrift institutions in the five OTS regions to ensure the safety and soundness of the industry. It ensures compliance with consumer protection laws and regulations, and oversees the regional quality assurance program to ensure consistent applications of policies and procedures. The Supervision area develops national policy guidelines to enhance statutes and regulations and to establish programs to implement new policy and law. It is also responsible for overseeing, directing, and managing applications processing, securities filing, corporate secretary and corporate systems program areas.

  • Research and Analysis performs the research and analysis functions of OTS. It is divided into four units: Risk Management, Economic Analysis, Industry Analysis, and Financial Reporting. It is responsible for the preparation and review of various OTS financial reports, including the quarterly report on the financial condition of the thrift industry. Research and Analysis also oversees the preparation and review of OTS regulations, bulletins, other policy documents, congressional testimony and official correspondence on matters relating to the condition of the thrift industry, interest rate risk, financial derivatives, and economics issues.

  • External Affairs provides expert counsel to the OTS Director concerning policy decisions and considerations involving the program responsibilities for matters external to the agency. It directs and formulates policy concerning the OTS' external affairs activities including Congressional Liaison, Press Relations, Interagency Relations and other external agency coordination and presentation.

  • Chief Counsel directs, manages, and oversees the legal activities of the agency including: provision of legal services to the Director, OTS and other agency staff; representation of OTS on pending litigation and other matters; preparation of records for final agency action in accordance with legal requirements; prosecution of enforcement actions relating to thrift institutions; provision of effective and timely legal advice and opinions; and drafting support on regulatory projects, statutes and regulations.

  • Administration is responsible for the overall direction of the agency, including policy and administrative functions. It directs policy development and operations of OTS administrative, contracting and procurement, training and human resources, ADP and telecommunications, financial management and records/information management programs. It is responsible for overall guidance to the Washington Headquarters and regional offices on a full range of administrative and management functions.
Mission The mission of OTS is to effectively and efficiently supervise thrift institutions to maintain the safety and soundness of institutions and to ensure the viability of the industry. The OTS supports the industry's efforts to meet housing and other community credit and financial services needs. Its expenses are funded entirely through assessments and fees levied on the institutions it regulates. To accomplish its mission, OTS has the following goals and objectives:
  1. maintain and enhance the risk-focused, differential and proactive approach to the supervision of institutions;
  2. improve credit availability by encouraging safe and sound housing and other lending in those areas of greatest need;
  3. enhance competitiveness of the thrift industry;
  4. enhance organizational efficiency and reduce expenses; and
  5. retain a qualified, efficient and motivated work force.
Private Insurance Companies

Private insurance companies are state-sponsored, but privately-owned and operated insurance funds for small commercial banks and thrifts within a state.

National Credit Union Admin.

The National Credit Union Administration (NCUA) approves, regulates, and supervises credit unions; insures deposits at member credit unions through the National Credit Union Insurance Fund.

National Credit Union Central Liquidity Facility

The National Credit Union Central Liquidity Facility (NCUCLF) makes loans to member credit unions.

National Credit Union Share Insurance Fund

The National Credit Union Share Insurance Fund (NCUSIF) insures the share accounts of credit union members up to $100,000 per account title.

State Banking Departments

State banking departments charter, regulate, and supervise state-chartered commercial banks and thrifts; pass on proposed mergers and consolidations intrastate and proposed changes in banks' capital structure; help liquidate closed banks; and compile reports and statistical data on banks. Many of the past duties of banking departments will be superseded by federal agencies, especially the Federal Reserve, since all banks will be de facto members.

State Insurance Departments

State insurance departments regulate and supervise insurance companies.

Securities and Exchange Commission

The Securities and Exchange Commission (SEC) oversees brokerage and investment bank activities and sets requirements and standards for companies whose stocks are traded on the public exchanges.

National Association of Security Dealers Regulation

The Financial Industry Regulatory Authority (FINRA) oversees brokerage activities for stocks traded through the National Association of Security Dealers Automated Quote System (NASDAQ).

Securities Investors Protection Corp.

The Securities Investors Protection Corp. (SIPC)insures depositors' accounts at member brokerage houses.

Secondary Market Institutions

Over the years, Congress has established several quasi-independent agencies to provide back-up liquidity for the banking system.

The Federal National Mortgage Assn. (Fannie Mae) was the first secondary market institution established by Congress back in 1934. It was originally a federally-sponsored agency, whose function was to provide liquidity for banks by buying FHA and VA mortgages from banks when credit was tight and reselling them when banks had excess liquidity. In 1970, Fannie Mae was empowered to make a secondary market for conventional mortgages. Today, it is a federally-chartered, private (stockholder-owned) corporation that buys, pools, and packages first and second (since 1981) mortgages for resale to private investors.

The Government National Mortgage Assn. (Ginnie Mae) is a federally-sponsored corporation, established by Congress in 1969, to buy, pool, and package mortgages for resale to private investors as "pass throughs," modified "pass throughs," or serial bonds. In the first form, the full cash proceeds, both interest and principal repayment, are "passed through" to investors after servicing charges are deducted by the originators. Modified "passed throughs" pay monthly to the investor an installment on the underlying mortgages and a fixed rate of interest on the unpaid mortgage balance. The serials pay interest semiannually at a specified rate of interest and return the principal at maturity.

The Federal Home Loan Mortgage Corp. (Freddie Mac) is a federally-chartered corporation, established in 1970, to buy, pool, and package first mortgages, originated by S & Ls, into securities for resale to private investors. As of Monday, January 13, 1986, Freddie Mac will buy, pool, package, and resell fixed-rate secondary mortgages as securities to private investors. At the same time, however, it will stop buying home-improvement loans.

The Credit Union National Association Mortgage Corporation (Connie Mac) is a federally-chartered corporation, established in 1979, to securitize mortgage loans from credit unions for sale to the Federal Home Loan Mortgage Corp., the Federal National Mortgage Association, and Government National Mortgage Association, as well as private investors. CUNA Mortgage Corp. pays the credit union a fee, sells the mortgages, and retains servicing of the mortgages and the fees that go along with the team.

The Student Loan Marketing Assn. (Sallie Mae) is a federally-chartered, stockholder-owned company that makes a secondary market in government-guaranteed student loans. It buys the loans from banks, securitizes them, and sells the securities to private investors.

Needless to say, the number of persons involved in the decision-making process is extensive. The web of authority is extremely complex. It is much more difficult in reality than in theory to state explicitly who the decision makers are.

top     Summary

Fiscal Policy: The President and Congress

After due consideration from all of the advisers in the executive branch, the President generally sets the tone for fiscal policy in his annual budget message. Congress, after much advice and debate, passes on a budget, which is presented to the President for signature or veto. Thus, the fiscal policy which emerges is the result of both executive and legislative actions on total expenditures and revenues for the federal government.

Monetary Policy: The Federal Reserve

Control of monetary policy is located in the central bank, the Federal Reserve. Although the number of financial market participants involved in the execution of monetary policy probably exceeds the number of government officials involved in fiscal policy, few of the other financial institutions have the ability or the resources to conduct monetary policy and none have the mandate, except the Federal Reserve. The official policy-making arm of the Federal Reserve is its Federal Open Market Committee (FOMC), a 12-member committee that includes the 7 members of the Board of Governors (BOG), the President of the New York Federal Reserve Bank (location of the Trading Desk), and the presidents of four other Reserve Banks on an annually rotating basis. The BOG has two other "arms" — the Discount Policy Group and the Reserve Requirement Policy Group (composed of senior officials at the Fed) — that are instrumental in formulating policies on their respective monetary policy tools. The BOG is empowered to make unilateral changes in reserve requirements, but changes in the discount rate must be initiated by the District Banks and approved by the BOG.

Debt Management Policies: Treasury Department

The Treasury Department, a cabinet of the executive branch of the federal government, is responsible for financing federal budget deficits and for rolling over (refunding) or retiring outstanding debt. The timing, amount, and maturity schedule of an offering is the responsibility of the Secretary of the Treasury, in consultation with the Chairman of the Federal Reserve Board of Governors. Although the Treasury is ultimately responsible for raising the funds, Congress plays a major role in three ways. First of all, each year Congress must pass on the annual budget. This budget legislation determines the amount of deficit to be financed — the amount of new (non-tax) monies to be raised by the Treasury each year. Second, Congress controls the total amount of Treasury debt outstanding by setting debt limits — the ceiling on the national debt. Periodically, Congress can and does pass legislation raising the debt limit, but not without trying to attach "pet" riders to the bill. Finally, Congress can impose interest rate restrictions on particular Treasury issues, such as the maximum 4.25% interest rate on bonds mandated by the Victory Liberty Loan Acts of 1917 and 1918. This ceiling rate forced the Treasury to seek alternative (shorter-term) methods of finance when long term market rates were above the limit. Congress eliminated the ceiling rate on marketable bonds in 1988.

Incomes Policies: The President, Congress, and the Federal Reserve

At times, the Federal Reserve has imposed interest rate ceilings and other credit controls that affect income and credit distribution, and, in an emergency, the President may impose certain wage and price controls without the consent of Congress. However, most incomes policies are the result of the coordinated efforts of the executive and legislative branches. After due consideration from all of the advisers in the executive branch, the President generally sets the tone for incomes policy. Congress, after much advice and debate, passes on any legislation effecting incomes policies, which is presented to the President for signature or veto. Thus, the incomes policy which emerges is the result of both executive and legislative actions. Generally, incomes policy legislation requires the establishment of a special regulatory board or agency to oversee execution and enforcement.

Supply Management Policies: The President, Congress, and the Federal Reserve

Supply-side policies involve fiscal and regulatory policies as well as control of interest rates. Therefore, the President, the Congress, and the Board of Governors of the Federal Reserve are the chief decision-makers.

top    Readings

Making Monetary and Fiscal Policy, G. L. Bach, Brookings Institute, Washington, DC, 1971: ch. 2

Public Finance in Theory and Practice, 4th ed, Richard A. Musgrave and Peggy B. Musgrave, McGraw-Hill, New York, 1984: ch. 2

The Federal Reserve Board Before Marriner Eccles (1931-1934), Walker F. Todd, a paper was presented at the Western Economic Association International Conference at Lake Tahoe, NE, 23 June 1993. A related article was published by the author as "History of and Rationales for the Reconstruction Finance Corporation," Economic Review (FRBClev), 28(4) 4Q1992: 22-35

Shadowing the Shadows (The Shadow Open Market Committee), Fettig, David, ed., The Region (FRBMinn), June 1993

A History of the Federal Reserve, Walker F. Todd, Mar 1994

The Federal Reserve System: Purposes and Functions, Board of Governors of the Federal Reserve System, Washington, DC, 1996: chs. 1, 6, 7

Carter Glass - A brief biography, Dave Page, The Region (FRBMinn), Dec 1997

A Conversation with Carter Glass, The Region (FRBMinn). Dec 1997

Carter Glass was right: The structure of the Federal Reserve is important, Gary H. Stern, The Region (FRBMinn), Dec 1997

U.S. Monetary Policy and Financial Markets, Anne-Marie Meulendyke, FRBNY, 1998

Come with Me to the FOMC, Laurence H. Meyer, The Gillis Lecture, Willamette University, Salem, OR, 2 Apr 1998

The Federal Reserve and Bank Supervision and Regulation, Laurence H. Meyer, Spring 1998 Banking and Finance Lecture, Widener University, Chester, PA, 16 Apr 1998

Our American Government, H. Con. Res. 221, 106th Congress, agreed to January 31, 2000

The Fed: Our Central Bank, What does the Fed do and how does it affect us? FRBChi, Nov 2000

U.S. Monetary Policy: An Introduction, FRBSF

top    Websites

Our American Government
FirstGov
Executive Branch
President
Treasury Department
Office of the Comptroller of the Currency
Council of Economic Advisers
Office of Management and Budget
Office of the Trade Representative
National Economic Council
Legislative Branch
Congress
Senate
House of Representatives
Congressional Budget Office
Government Accounting Office
Judicial Branch
Supreme Court
Federal Courts
Federal Financial Institutions Examination Council
Federal Reserve
Board of Governors of the Federal Reserve System, Fedpoint (FRBNY)
Federal Reserve History, FRBMinn
The Federal Reserve System In Brief, FRBSF
Federal Deposit Insurance Corporation
Federal Home Loan Bank Board
National Credit Union Administration
Securities and Exchange Commission
Financial Industry Regulatory Association
Federal National Mortgage Assn.
Government National Mortgage Assn.
Federal Home Loan Mortgage Corp.
Student Loan Marketing Assn.


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