On what grounds is the semi-independent status of the Federal Reserve justified by those who defend it? On what grounds is the status attacked by those who oppose it? Why might eliminating the Fed Solution Q. On what grounds is the semi-independent status of the Federal Reserve justified by those who defend it? Because the structure and status of the Federal Reserve is CLEARLY defined BY LAW. U.S. Code, Title 12, Chapter 3 covers the structure and governance of the Federal Reserve System. Also, because people who defend the Federal Reserve System actually know how it works and how it is structured. We don\'t base our knowledge on conspiracy theories or some quote taken out of context. The Federal Reserve System is controlled by a Board of Governors, also known as the Federal Reserve Board. The Board of Governors, located in Washington, D.C., provides the leadership for the System. The Board of Governors is the national component of the Federal Reserve System. The board consists of the seven governors, appointed by the president and confirmed by the Senate. Governors 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. A network of 12 Federal Reserve Banks and 25 branches make up the Federal Reserve System under the general oversight of the Board of Governors. Reserve Banks are the operating arms of the central bank. Each of the 12 Reserve Banks serves its region of the country, and all but one has other offices within their Districts to help provide services to depository institutions and the public. The Banks are named after the locations of their headquarters-Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The Reserve Banks serve banks, the U.S. Treasury, and, indirectly, the public. A Reserve Bank is often called a \"banker\'s bank,\" storing currency and coin, and processing checks and electronic payments. Reserve Banks also supervise commercial banks in their regions. As the bank for the U.S. government, Reserve Banks handle the Treasury\'s payments, sell government securities and assist with the Treasury\'s cash management and investment activities. Reserve Banks conduct research on regional, national, and international economic issues. Research plays a critical role in bringing broad economic perspectives to the national policymaking arena, and supports Reserve Bank presidents who all attend meetings of the Federal Open Market Committee (FOMC). Each Reserve Bank\'s board of directors oversees the management and activities of the District bank. Reflecting the diverse interests of each District, these directors contribute local business experience, community involvement, and leadership. The board imparts a private-sector perspective to the Reserve Bank. Each board appoints the president and first vice president of .

1. On what grounds is the semi-independent status of the Federal Reserve justified by those who
defend it? On what grounds is the status attacked by those who oppose it? Why might
eliminating the Fed
Solution
Q. On what grounds is the semi-independent status of the Federal Reserve justified by those who
defend it?
Because the structure and status of the Federal Reserve is CLEARLY defined BY LAW. U.S.
Code, Title 12, Chapter 3 covers the structure and governance of the Federal Reserve System.
Also, because people who defend the Federal Reserve System actually know how it works and
how it is structured. We don't base our knowledge on conspiracy theories or some quote taken
out of context.
The Federal Reserve System is controlled by a Board of Governors, also known as the Federal
Reserve Board. The Board of Governors, located in Washington, D.C., provides the leadership
for the System.
The Board of Governors is the national component of the Federal Reserve System. The board
consists of the seven governors, appointed by the president and confirmed by the Senate.
Governors 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.
A network of 12 Federal Reserve Banks and 25 branches make up the Federal Reserve System
under the general oversight of the Board of Governors. Reserve Banks are the operating arms of
the central bank.
Each of the 12 Reserve Banks serves its region of the country, and all but one has other offices
within their Districts to help provide services to depository institutions and the public. The Banks
are named after the locations of their headquarters-Boston, New York, Philadelphia, Cleveland,
Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
The Reserve Banks serve banks, the U.S. Treasury, and, indirectly, the public. A Reserve Bank

2. is often called a "banker's bank," storing currency and coin, and processing checks and
electronic payments. Reserve Banks also supervise commercial banks in their regions. As the
bank for the U.S. government, Reserve Banks handle the Treasury's payments, sell government
securities and assist with the Treasury's cash management and investment activities. Reserve
Banks conduct research on regional, national, and international economic issues. Research plays
a critical role in bringing broad economic perspectives to the national policymaking arena, and
supports Reserve Bank presidents who all attend meetings of the Federal Open Market
Committee (FOMC).
Each Reserve Bank's board of directors oversees the management and activities of the District
bank. Reflecting the diverse interests of each District, these directors contribute local business
experience, community involvement, and leadership. The board imparts a private-sector
perspective to the Reserve Bank. Each board appoints the president and first vice president of the
Reserve Bank, subject to the approval of the Board of Governors.
All member banks hold stock in Reserve Banks and receive dividends. Unlike stockholders in a
public company, banks cannot sell or trade their Fed stock. Reserve Banks interact directly with
banks in their Districts through examinations and financial services and bring important regional
perspectives that help the entire Federal Reserve System do its job more effectively.
Additionally, by law, private individuals, non-banking corporations, and foreign corporations
cannot own more than a tiny amount of Federal Reserve stock and these small owners have no
say in the operation of the banks.
Approximately 38 percent of the 8,039 commercial banks in the United States are members of
the Federal Reserve System. National banks must be members; state-chartered banks may join if
they meet certain requirements. The member banks are stockholders of the Reserve Bank in their
District and as such, are required to hold 3 percent of their capital as stock in their Reserve
Banks.
As far as reserves, the Federal Reserve Board of Governors sets requirements for the amounts
that member banks and depository institutions must set aside in the form of reserves. Reserve
requirements act as a control on the expansion of money and credit and may be raised or lowered
within limits specified by law (lowering reserve requirements allows more bank lending and
money growth; raising requirements, less lending and money growth).
Another interesting fact: The Federal Reserve owns outright $11 billion in gold reserves as

3. evidenced by the Fed's balance sheet.
Another interesting fact #2: The Federal Reserve is required by law to rebate interest collected
on U.S. Government debt to the U.S. Treasury.
Another interesting fact #3: The Federal Reserve only holds about 8% of the total U.S. debt.
Another 44% is held by the government. Yes, the government lends money to itself. Only about
47 to 48% of the total U.S. debt is held by private individuals, corporations and foreign
governments.
Q. On what grounds is the status attacked by those who oppose it?
The monetary decisions of the Federal Reserve do not have to be ratified by the President (or
anyone else in the Executive Branch). The Fed receives no funding from Congress, and the
members of the Board of Governors, who are appointed, serve 14-year terms. These terms do not
coincide with presidential terms, creating further independence.
However, the Federal Reserve is subject to oversight by Congress, which aims to ensure it
achieves the economic objectives of maximum employment and stable prices. And the Fed Chair
must submit a semi-annual report on monetary policy to Congress.
Without a degree of autonomy, the Fed could be influenced by election-focused politicians into
enacting an excessively expansionary monetary policy to lower unemployment in the short-term.
This could lead to high inflation and fail to control unemployment over the long-term.
It is unconstitutional for Congress to assign a constitutional power to an independent government
agency. According to the Constitution, Congress has the power to coin money and regulate its
value. In 1913, Congress delegated this power to the Fed through the 1913 Federal Reserve Act.
However, some argue that such a delegation is fundamentally unconstitutional. Opponents of Fed
independence also suggest that it is undemocratic to have an unelected agency, unaccountable to
the US public, dictating monetary policy.
Fears over the massive expansion of the Federal Reserve balance sheet and questionable bailouts
to firms such as American International Group, Inc. (A.I.G.) have led to demands for increased
transparency and accountability. Recent calls in Washington to 'audit' the Federal Reserve
could potentially undermine the independent status of the US central bank.
Q. Why might eliminating the Fed