The Federal Reserve Board of Governors is the governing body that guides the U.S. central bank. The Board consists of seven members—nominated by the president and confirmed by the Senate—who each serve 14-year terms, all of which are staggered. A new member is appointed every two years.
In addition to the Board, the Federal Reserve System has two other components. The 12 regional Federal Reserve Banks provide services to the nation's commercial banking sector, whereas the Federal Open Market Committee (FOMC) conducts monetary policy. Its goal is to promote maximum employment, stable prices, and moderate interest rates over time. All governors sit on the FOMC, along with four of the 12 regional bank presidents.
President-elect Joe Biden wants the Fed to expand its purpose to include closing racial and economic gaps, which would require an amendment to the Federal Reserve Act by Congress. Biden wants the Fed to require faster check clearing, and to achieve greater diversity in its hiring practices.
The Fed is located at 20th Street and Constitution Avenue NW, Washington, D.C. 20551. The Fed has about 3,000 employees who support the Board.
Fed Board Independence
The Board structure was created to ensure its independence from politics. The president nominates potential Governors, and the U.S. Senate confirms them. If the staggered schedule is followed, then no president or congressional party majority can control the Board.
The Fed's independence allows it to focus on long-term economic goals, prioritizing fair representation of all areas of the country. Once appointed, Governors may not be removed for their policy views, and, as a result, they can't be pressured to either raise or lower interest rates. This allows them to make all decisions based solely on economic indicators.
Who Is on the Federal Reserve Board of Governors?
There are seven governors led by a chair and vice chair, who each serve for four-year terms. Both the chair and vice chair may be reappointed to additional four-year terms in the future.
The Fed Chair is Jerome Powell. He is already a Governor, serving from May 25, 2012, to Jan. 31, 2028. Prior to joining the Fed, he had been a visiting scholar at the Bipartisan Policy Center, a partner at the Carlyle Group from 1997 to 2005, and a U.S. Treasury official under President George H.W. Bush.
Powell replaced Janet Yellen, who enacted several successful policies that Powell is continuing. Powell is also following in Yellen's footsteps by gradually raising interest rates.
Chairman Powell also chairs the FOMC, where he frequently meets with the president, the secretary of the Treasury, and Congress. The chair is a member of the International Monetary Fund and the Bank for International Settlements. The person in this position is also the finance minister of the G-7 and G-20.
The position of vice chair is vacant. Richard H. Clarida was vice chair until he resigned effective Jan. 14, 2022. His term began Sept. 17, 2018, and was expected to run until Jan. 31, 2022. Clarida led the Fed’s 2020 review of its long-term objectives and monetary policy strategy. He previously served as assistant secretary for economic policy of the U.S. Treasury in the George W. Bush administration and was also a managing director of PIMCO and a professor at Columbia University.
Randal Quarles resigned at the end of December 2021. His term was slated to run from Oct. 13, 2017, to Jan. 31, 2032. Quarles was the Vice Chair for Supervision until Oct. 13, 2021. He was also the chair of the international Financial Stability Board. Both positions were created by the Dodd-Frank Wall Street Reform Act to strengthen financial stability after the 2008 financial crisis. One policy Quarles stood by is the deregulation of banks. Previously, he was a managing director at Cynosure Group and the Carlyle Group, and was also a Treasury official under President George W. Bush.
Lael Brainard (June 16, 2014, to Jan. 31, 2026) is the only Ph.D. economist on the Board. She was a senior Treasury official from 2010 to 2013, a senior member of the Brookings Institution from 2001 to 2008, and Deputy National Economic Advisor to President Clinton. She was also a professor of economics at the MIT Sloan School of Management from 1990 to 1996.
Michelle Bowman (Nov. 26, 2018, to Jan. 31, 2034) was formerly the State of Kansas bank commissioner, an experience Congress requires of at least one Governor. Before joining the Board, Bowman held senior positions in the Department of Homeland Security and the Federal Emergency Management Agency.
Christopher Waller was approved by the Senate on Dec. 3, 2020. His term runs through January 2030. He was the director of research at the Federal Reserve Bank of St. Louis since June 2009, and his principal research interests are monetary theory, political economy, and macroeconomic theory.
Former President Donald Trump inherited a rare opportunity to stack the Board in his favor. Five of the six most recently sitting Governors were his appointees. The seventh position remains vacant.
What Does the Board Do?
The Board of Governors guides the operation of the Federal Reserve System to promote the goals and fulfill the responsibilities given to it by the Federal Reserve Act.
In summary, the Board has the following four primary functions.
Guide Monetary Policy
The most important Board function is to guide monetary policy. It does this through the FOMC, which all Governors are part of. The Board has the majority of seats on the FOMC, so it effectively controls all decisions, while also taking input from the other members, as they are presidents of the member banks. As the majority, the Board sets the discount rate and the reserve requirement for member banks.
The FOMC meets eight times a year to set the target for the Fed funds rate and to implement open market operations. Other Federal Reserve tools include the discount window, margin requirements, and reverse repos.
Supervise and Regulate Banks
The Board regulates the general banking industry in response to Congressional Acts. It sets rules and guidelines, adjusting them for the size and complexity of the banks. This promotes the safety and soundness of the banking system.
The Dodd-Frank Act of 2010 expanded the Fed’s supervisory and regulatory responsibilities to include a more systemic approach. It created a new interagency Financial Stability Oversight Council to monitor risks to the financial system as a whole.
The Board also supervises 753 banks that are members of the Federal Reserve System. The Office of the Comptroller of the Currency supervises over 1,000 national banks. The Federal Deposit Insurance Corporation supervises more than 3,000 state banks that aren't Federal Reserve members. The National Credit Union Administration supervises over 5,000 credit unions. This fragmentation allows banks to choose their supervisor by determining what kind of bank they want to be. That's one of the complexities that created the financial crisis.
The Board also makes sure these banks conform to consumer protection laws and regulations. This includes performance under the Community Reinvestment Act, the Fair Housing Act, and other similar laws.
Manage Financial Payments System
The Board manages the U.S. payments system. The banks supervised by the Board clear checks, process electronic payments, and distribute cash, ensuring financial transactions occur smoothly and without disruption.
Analyze Economic Developments
The Board analyzes economic developments, keeping track of and reporting out key information. It oversees the release of the Beige Book monthly. The Beige Book is a survey of economic conditions. In addition, the Board provides the monetary policy report twice a year, around February 20 and July 2, and it reports its findings on the state of the economy to Congress. Specifically, the chair presents separately to the Senate Committee on banking, housing, and urban affairs, and to the House Committee on financial services.
When Does the Board Meet?
The Board meets twice a month, when it addresses all regulatory and monetary policy. The public has a right to attend any open session. The closed sessions discuss individual bank supervisory issues and are therefore closed to the public.