Fed Backgrounder

The Federal Reserve System

The Federal Reserve System was created by an act of Congress in 1913. The responsibilities of the Federal Reserve include influencing the supply of money and credit, regulating and supervising financial institutions, serving as a banking and fiscal agent for the United States government, and supplying payments services to the public through depository institutions like banks, credit unions, savings and loans, etc. Payments services include issuing, transferring and redeeming U.S. government securities, processing and clearing checks, transferring funds, and supervising bank holding companies and Fed member banks throughout the Federal Reserve districts.

The Federal Reserve’s structure is composed of the Board of Governors in Washington, D.C., and 12 regional Reserve banks. A major System component is the Federal Open Market Committee (FOMC).

Board of Governors

The Board of Governors consists of seven members who are appointed to 14-year terms by the President of the United States and confirmed by the Senate.

The Board conducts monetary policy, has general oversight of the operations of the regional Reserve banks and their branches and the activities of various banking organizations, has broad responsibility for the U.S. payments system and issues regulations under most federal consumer credit protection laws.

Regional Reserve Banks

The Federal Reserve System has 12 districts, each served by an independently chartered regional Reserve bank. These banks are in St. Louis, Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, New York, Philadelphia, Richmond and San Francisco. There are also 25 branches and offices within the 12 districts.

Federal Open Market Committee (FOMC)

The FOMC, the System’s principle monetary policy making body, comprises the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York and four other Reserve bank presidents on a rotating basis. All 12 Reserve bank presidents participate in FOMC policy deliberations whether or not they are voting members. The FOMC meets eight times a year.

The Eighth District and The Federal Reserve Bank of St. Louis

The Federal Reserve Bank of St. Louis, with branches in Little Rock, Ark., Louisville, Ky., and Memphis, Tenn., serves the Eighth Federal Reserve District. This includes all of Arkansas, eastern Missouri, western Kentucky, western Tennessee, southern Illinois, southern Indiana and northern Mississippi.

The headquarters office is located in downtown St. Louis at the intersection of Fourth, St. Charles and Broadway. Eighth District branches are:

• Total Eighth District Employees: 1,129

• Each hour, the Federal Reserve’s Eighth District processes an average of 320,000 to 360,000 Federal Reserve notes (paper money).
• The Retail Payments Division of the Federal Reserve Bank of St. Louis processes approximately 3-4 million check transactions per day. About 65 percent of these items are drawn on commercial depository institutions, and the remaining 35 percent are drawn on the United States Postal Service and the U.S. government.
• In 2000, the Federal Reserve consolidated its automated clearinghouse (ACH) transactions at the Federal Reserve Bank of Minneapolis. Examples of automated clearinghouse activities include electronic paycheck deposits and electronic payments of bills such as consumer insurance premiums. The Federal Reserve banks are the nation’s largest ACH operators with more than 21,000 ACH participants and more than 8.5 billion transactions processed in 2005.
• Through its Fedwire® service, the Federal Reserve also processes an average of more than 528,000 wire transfers every day. These daily transactions total more than $2.1 trillion, or an average of about $3.9 million per transfer.
• In March of 2001, the St. Louis Fed was awarded the Treasury Relations and Support Office, making the Reserve Bank the coordinator for the Federal Reserve System’s financial services to the largest user of those services—the U.S. Treasury Department. Those services total about $430 million per year and help the U.S. Treasury to accomplish its goals efficiently and effectively. Examples of the services provided include government cash management support, processing government payments and collections, developing software to support federal debt collections, and supporting the selling and redeeming of U.S. Treasury securities and savings bonds. The St. Louis Reserve Bank also manages Treasury’s “Go Direct” program aimed at convincing retirees and others receiving Social Security checks to convert these payments to electronic deposit. In the first year of the program, more than 600,000 payments were converted, saving the U.S. Treasury and U.S. tax payers more than $18 million in future payment processing costs.
• The St. Louis Fed’s Banking Supervision and Regulation Division supervises 564 bank holding companies, 92 state member banks and 56 financial holding companies in the Eighth District.
• The Board of Directors of the Federal Reserve Bank of St. Louis has nine members. Six are elected by the Eighth District member banks, and three are appointed by the Board of Governors of the Federal Reserve System in Washington, D.C. Three directors are bankers and the other six are selected to represent business, labor and consumer interests in the District. In addition, each branch (Little Rock, Louisville and Memphis) has its own board consisting of seven members. Directors oversee general operations of the Reserve Bank and provide the Bank with a wealth of information and perspectives on economic conditions within their regions.

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