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The Board of Governors is the organization at the head of the Federal Reserve banking system in the United States. The members of the board make important decisions about monetary policy that are intended to promote a healthy and growing American economy. They also oversee operations at the Federal Reserve Bank (or Fed), and they keep an eye on the general condition of the economy. The organization is headquartered in Washington, DC, and almost 2,000 people work in its the offices.
The Fed itself was created by the Federal Reserve Act of 1913, which was designed to create a central banking system for the United States. The act included a provision to establish a Board of Governors to oversee the Fed, stipulating that the group would be an independent government agency. Although members of the board are appointed by the president and confirmed by Congress, they operate on their own, without funding from Congress and ideally without political pressure.
There are seven people on the board, and under the terms of the Federal Reserve Act, no two governors come from the same Federal Reserve district. The appointees are supposed to represent a wide cross-section of interests, from agriculture to manufacturing, to ensure that the many facets of the American economy are considered when it makes decisions. With 12 districts to choose from, not every district is represented at all times.
Each board member serves for 14 years, and the appointments are designed to stagger so that one board member leaves every two years. This ensures that no one president has too much control over the operations. If members serve their full terms, a president will be able to appoint two while he or she is in office. This is intended to promote an apolitical stance for the Board of Governors.
Many Americans are familiar with the chairman of the Board of Governors, who tends to be a high profile figure. The president selects the chair and vice-chair from the members of the board, and this selection is also confirmed by Congress. In a remarkable demonstration of the apolitical nature of the organization, presidents of different political parties have sometimes chosen the same individual to serve as chairman. Once a board member has served his or her 14 years, the board member cannot be appointed again.