How much control over the Federal Reserve does the U.S. Government have?

Question

Or, in other words: Who does the head of Fed report to? Is the Federal Reserve a private institution?

I'm going to be a bit naive here, have just read about how the Fed has been brought to life and can hardly believe that it did manage to survive for almost a century (!)

I have already checked many sources but cannot get a definite answer, so would appreciate if some people, maybe American, could expand on the topic.

Answer 1

It has both public and private entities. Calling it a 'private institution' is a little naive, but has some validity.

http://en.wikipedia.org/wiki/Federal_Reserve_Act

You can read the easy stuff about it on wikipedia, but the official legislative act that created it will give you better info: http://www.law.cornell.edu/uscode/12/usc_sup_01_12_10_3.html

Answer 2

It's a central bank with public and private aspects.

• It consists of US Government and member bank appointed board members.
• It operates without the need for direct ratification of decisions by the Congress or Executive, but is subject to Congressional regulation.
• It is a for-profit institution, but all profits in excess of the dividend to member banks are paid to the US Treasury.

It has attributes that are unique compared to central banks like the Bank of England or Bank of Canada. But the US has always had an unusual financial system, traditionally driven by lots of small banks, which were mostly state-regulated for most of US history.

Answer 3

The Fed board members are appointed by the US President and approved by the Senate. That is the only control the US government has over the Fed. Otherwise it is a private, unaudited bank that has the unique ability to print money.

The Fed was created in secret (or for a shorter article) on Jekyll Island by a bunch of bankers who disguised their identities so no one would know what they were meeting about. That seems like a great way to start a central bank.

The Fed was created by bankers for bankers. The citizens of the US were not clamoring for a central bank. The bankers were the ones who desired a central bank since all fractional reserve banks are always teetering on the verge of bankruptcy.

List of participants at the meeting on Jekyll Island:

• Senator Nelson W. Aldrich, Rockefeller in-law
• Henry P.Davison, Morgan partner (banker)
• Paul M.Warburg, Kuhn, Loeb & Co. partner (banker)
• Frank A. Vanderlip, vice-president of Rockefeller's National City Bank (banker)
• Charles D. Norton, president of Morgan's First National Bank of New York (banker)
• A. Piatt Andrew, Harvard economist and staff assistant to Aldrich on the Monetary Commission.

Answer 4

The Federal Reserve is not Federal and it is not a reserve. It is independent of our government. If you want a very good inside look of the Federal Reserve, purchase a book titled The Creature from Jekyll Island.