The structure of the Federal Reserve was designed to provide the institution with a broader perspective on the economic activities across the United States. The institution constitutes a central, government agency in Washington D. C. along with twelve regional Federal Reserve Banks across the country. The responsibility of regulating and supervising the activities of the financial institutions, providing banking services to depository institutions and the federal government, and providing accurate banking information to the consumers is shared by both the Board of Governors comprising the Federal Reserve System and the Federal Reserve Banks.
The Federal Open Market Committee (FOMC) is an integral part of the Federal Reserve System constituting members of the Board of Governors, president of the Federal Reserve Bank of New York, and presidents of four other Federal Reserve Banks on a rotation basis. The responsibilities of this body include overseeing open market conditions that is manipulated by the Federal Reserve to influence the overall monetary and credit situation in the country.
The Federal Reserve Banks issue shares of stocks to Member Banks but this stock cannot be traded, sold, or pledged as a security for loan since the Reserve Banks are non-profit institutions and the ownership of stock is mandatory for the Member Banks as a precondition for membership. The banking institutions in United States can be categorized into three types depending on the government body those charters them and whether they are members of the Federal Reserve System.
National banks are chartered by the federal government and are members of the Federal Reserve. State Banks chartered by the state are not required to be members of the Federal Reserve but they have the option of becoming one provided they meet the standards set by the Board of Governors of the federal institution. Various committees that advise the Board of Governors on financial issues execute the tasks and responsibilities of the Federal Reserve.
These committees are Federal Advisory Council composed of twelve representatives from the banking industry; Consumer Advisory Council takes care of Consumer Credit Protection Act representing the interests of consumers, communities, and financial services industry; Thrift Institutions Advisory Council having representatives from savings and loan institutions, mutual savings bank, and credit unions.