This preview shows page 1. Sign up to view the full content.
Unformatted text preview: lished from time to time to meet the fiscal policy of the Fed. For the past several years membership in the Federal Reserve has been on the decline. This decline has been of concern to many economists because the Fed will not be able to control the supply of money or the rate of inflation as effectively as it might if the majority of the depository institutions were members. Realizing this problem, Congress passed the Depository Institutions Deregulation and Monetary Control Act of 1980, which was signed by the President and became law on March 31, 1980. This act comprises ten titles affecting many areas of operations of the depository institutions. One of the most important titles is Title I, which greatly strengthens the Fed's control over nonmember banks by requiring them to meet the reserve requirements set by the Fed. This requirement will be phased in over 8 years. OPEN MARKET COMMITTEE
The implementation of the change of the money supply is the responsibility of the open market committee. The Federal Reserve open market committee is presently composed of 12 members; 5 of the members are chosen by the board of governors and the
5-4 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 5: GOVERNMENT PARTICIPATION & BACKED LOANS
remainder come from the 12 Federal Reserve districts. With only seven members left to be chosen, you can see that not all of the banks get to choose a member singly. In fact, only the Reserve Bank of New York gets to choose a member by itself. The committee members meet on a regular basis, usually the third Tuesday of the month in an unannounced location, to establish what action they should take to carry out the fiscal policy of the board. The decision they reach is not announced to the general public, but the decisions of the open market committee are published on a delayed basis in the Federal Reserve Bulletin to hinder speculation on government securities and the U.S. dollar. The decision is carried out through a small staff that operate...
View Full Document
This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10