The Federal Reserve System, known informally as the Fed, is the core center banking system of the United States. It was founded back in 1913 by the government when it enacted the Federal Reserve Act. There are twelve regional Federal Reserve Banks located in large cities around the U.S. They act as fiscal agents, each one, for the U.S. Treasury. Each one of these banks has it own Federal Reserve board of directors, of which there are nine.
The panic of 1907 really served to show people that a central banking system was needed in the U.S., and that was what brought about the formation of the Federal Reserve by the government in 1913. The Federal Reserve is really needed by our country because without a centralized bank, the country has proven over and over that banks will fail. With the creation of a central bank, the banking system has become much more secure.
The Federal Reserve influences the U.S. economy in several different ways. One is through Federal Reserve interest rates. The bank controls these interest rates, and adjusts them as needed to slow or steady the growing economy as need be. The Federal Reserve really performs a delicate balancing act, trying to keep our country from slipping into recession. But when this balance is tipped, the nation does indeed begin to fall into an economic recession.
Federal Reserve history is actually very interesting. A centralized bank was first commissioned back in 1791. It was disbanded in 1811, than institutionalized again in 1816. Then, from 1837 until 1913, we saw both an era of free banks and an era of National Banks. However, failing banks and consecutive recessions brought it to congressional attention that a new central bank was needed to control the trendy U.S. banking problems. So, the Federal Reserve was founded. Understanding the Federal Reserve system will much better help you answer the questions you have about it.
So, you might ask, who owns the Federal Reserve? Well, the Federal Reserve is a government institution. However, it is independent and has private aspects. It is not a private organization, and it does not operate with the intention of making a profit. The actual stocks of the regional Federal Reserve banks are actually owned by the operating banks that are in that region or system. The system receives authority from the Federal Reserve Act passed by congress back in 1913, and it is from this same act that it receives it prime purpose.
