The U.S. Federal Reserve Board of Governors is the center of the U.S. Federal Reserve System. Its seven members are appointed by the president and confirmed by the Senate. To ensure the U.S. Federal Reserve's independence, each governor serves a 14-year term, with one member’s term expiring every other January. The chairman of the Board of Governors, currently Ben S. Bernanke, is chosen from among the seven governors and serves a four-year term. In the past chairmen have typically retired if not reappointed at the end of four years, regardless of how many years remain in their terms as Fed governor.
The Board of Governors controls monetary policy for the entire U.S. Federal Reserve System. All seven governors sit as voting participants on the 12-member U.S. Federal Open Market Committee (FOMC). The rest of the FOMC is composed of presidents of the regional U.S. Federal Reserve Banks, with the president of the New York U.S. Federal Reserve Bank always a voting member. With a permanent majority, the governors thus control open market operations. In addition, the board sets reserve requirements for the nation's banks, within limits imposed by legislation. With its power to review the discount rate set by member banks, the board effectively controls the discount rate as well.
The chairman of the Fed board has other responsibilities that give him or her significant influence in national economic affairs. The chairman frequently testifies before Congress, in addition to advising the president. The seven Fed governors have also on occasion represented the United States in negotiations with foreign governments regarding economic matters.
The U.S. Federal Reserve Board also plays a role in banking regulation. The board's duties include approving bank mergers, determining the permissible activities of bank holding companies, and supervising the activities of foreign banks in the United States.
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