Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Federal Reserve Board (FRB)

What it is:

The Federal Reserve Board (FRB), officially called the Federal Reserve Board of Governors, is the Federal Reserve System's primary decision-making body.

How it works (Example):

There are seven members on the FRB, each appointed to a 14-year term by the President of the United States with the advice and consent of the Senate. The President designates the chairman and the vice-chairman of the Board. Ben Bernanke is the current chairman of the FRB.

Three committees advise the FRB: the Federal Advisory Council, the Consumer Advisory Council, and the Thrift Institutions Advisory Council.

The FRB is part of the Federal Open Market Committee (FOMC), along with the president of the New York District Federal Reserve Bank and four other Federal Reserve District bank presidents. The FRB chair is also the chair of the FOMC.

The FRB also appoints three of the nine directors at each of the Federal Reserve's 12 reserve banks. Either the FRB or the local reserve banks appoint the directors of the Federal Reserve's 25 branch banks.
 

Why it Matters:

The FRB has substantial influence on the financial markets because its decisions and actions are at the center of U.S. monetary policy. The FRB sets reserve requirements for banks and regulates their asset holdings. It also approves changes in the discount rate, which is the interest rate the Fed charges member banks as "lender of last resort

The anticipated actions of the FRB are the subject of considerable speculation and comments from members of the FRB, official or unofficial, are scrutinized by the market.

Related Terms View All
  • Junk Fees
    Let's say John and Jane Doe buy a house and receive the Truth in Lending Act statement at...
  • Depreciated Cost
    Another term for depreciated cost is net book value. The formula for depreciated cost is...
  • War Babies
    Let's assume Company XYZ builds jets for the Navy, and Company ABC builds guns for the...
  • Weak Sister
    Let's say John Doe's portfolio contains five stocks: Company A, Company B, Company C,...
  • Price Basing
    Price basing happens all the time in the media when it comes to gasoline prices. For...