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Board of Governors - Consists of the seven members appointed by the President to 14-year terms and is the most powerful body of the Federal Reserve. The Board members represent the majority of the 12-member FOMC (Federal open Market Committee), the committee that formulates and decides upon interest rate policy.
Open Market Committee - Composed of the seven members of the Board of Governors and five Federal Reserve Bank presidents who are responsible for formulating and deciding upon interest rate policy. The presidents of the Reserve Banks serve one-year terms on a rotating basis beginning January 1 of each year. The president of the Federal Reserve Bank of New York has a permanent seat on the FOMC.
District Banks - The Federal Reserve Banks operate in a fashion similar to private depository institutions because they hold cash and make loans, although only to depository institutions. The district banks also move currency and coins into and out of circulation and process millions of checks every day. In addition, they play a pivotal role in the formulation of monetary policy and in the supervisory responsibilities of the Federal Reserve System.
Board of Directors - Each of the Federal Reserve Banks is overseen, as required by the Federal Reserve Act of 1913, by a nine-member body of directors who are familiar with the economic and credit conditions in their district. As such, the directors are required to set the discount rate in their district, subject to the approval of the Board of Governors in Washington. Thus, directors can often wield significant influence upon the FOMC, if their collective voices sound in unison.
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