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Learn about the history, purpose and functions of our nation’s central bank, also known as the Federal Reserve Bank (FED). This session will give you insight from the inside the FED, both into its dual mandate and its decision making as it relates to you and the economy. We will uncover several myths and misconceptions of the FED. This session will be particularly informative for economics, finance/banking and other business teachers. Discover the potential of partnering with a FED near you. Attendees will receive free DVDs, lesson plans and resources. Teachers from all academies will benefit from this session.
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#NAFNext2014
The FED, The Economy and YOU
Gloria GuzmanEconomics and Financial Education
SpecialistFRB Atlanta- Miami Branch
A New Nation 1775-1790
“Not worth a continental”
First Bank of the United States1791-1811
Anti-Federalists 1791-1811
Second Bank of the United States1816-1836
Free Banking Era1836-1863
1907
What they are saying about us
Quasi-Governmental Nature of the Fed
•A federal structure
•Political independence− Financially self-funded− Long terms of
governors (14 years) help relieve short-term political pressures
•Congress and the Fed− Congress can alter Fed
responsibilities− Chairman testifies
twice a year
• The
Federal Reserve System Today
Three advisory councils:•Federal•Community Depository Institutions
•Model Validation
Board of Governors
7 governors
Federal Open
Market Committe
eDirectors
9 members12 Federal
Reserve Banks12 presidents
BOG as of July 2014
• Janet L. Yellen chair 2014-2018 (2004-10-FRB president-San Francisco)
• Stanley Fischer (banker) vice-chair• Daniel K. Tarullo (Law professor) • Jerome H Powell (visiting scholar at the Bipartisan Policy Center
in Washington, DC) • Lael Brainard (Undersecretary of the U.S. Department of
Treasury from 2010 to 2013)
The Federal Open Market Committee, or FOMCFOMC
Monetary Policy and The Fed’s Dual Mandate
Federal Reserve Bank of Atlanta
Growth
Price stability
Payment Services
Supervision and Regulation
• State-chartered member banks
• U.S. banking holding companies
• Foreign banking organizations operating in the U.S.
The Fed Today
Myths Help Explain the Unknown
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Statue of Zeus
USA
Activity Read the slide
If you believe it is a MYTH stand on the right side of the room.
If you believe it is a FACT stand on the left side of the room.
If you are not sure stand in the middle of the room.
Myth or Fact
Misconception #1
• The Federal Reserve does not get audited.
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In fact…
#NAFNext2014
• The Federal Reserve is owned by foreigners, wealthy, powerful
individuals
Misconception #2:
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6%
IT IS NOT “OWNED”
#NAFNext2014
• The federal reserve uses taxpayers dollars to fund itself
Misconception # 3
Self sustained
Misconception # 4
• The Federal Reserve exceeded its legal authority during the 2008
financial crisis.
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In fact…
• Section 13-3 (c) of the Federal Reserve Act gave the Fed decision-making authority “in unusual and exigent circumstances” for emergency lending to institutions “ in any program or facility” that are fundamentally sound but face short-term liquidity constraints.
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Source: JP Morgan 14
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350Fact: Credit Markets Froze Up
Other
Non-U.S. Residential Mortgages
Student Loans
Credit Cards
Autos
Commercial Real Estate
Home Equity (Subprime)
$Billions $Billions
Fed Coordinated with Treasury and FDIC During the Crisis of
2008-2009
Goal: To restore financial stability
FedLends to supply liquidity to the
system
TreasuryInjects capital
to support solvency Other
(e.g. FDIC)
Guarantees deposits to
promote confidence
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Targeted and coordinated responses aim to improve liquidity, solvency, confidence
