Board of Governors

The board of governors has supervisory control over all of the Reserve banks throughout the system. The members are appointed by the President of the United States with the advice and consent of the Senate. The board is composed of seven individuals who each serve for a term of 14 years. These appointments are staggered so that only one term expires every other year. In order for the board to be truly representative of the whole system, the President tries to appoint only one member from each district.

The board publishes the Federal Reserve Bulletin, a monthly publication that gives information on the state of the economy in the nation and the world. The board also publishes reports on studies or research done for or under the authority of the Fed. One of the important groups of figures released each week by the Fed is "Federal Reserve Data." These figures reflect the changes in the weekly averages of member banks' reserves and other related items. These weekly figures also report any change in the U.S. money supply.

The board can set the interest rate that member banks will have to pay when borrowing monies from the Fed. This rate is very important to the real estate industry because banks use this rate to establish the base rate (the rate their most creditworthy customer would pay). The base rate is usually the basis for the cost of builders' interim funds and for the rate for car loans and business operations loans. Due to recent litigation, many banks are abandoning prime rates for base rates.

The board may raise or lower the reserve requirements of the member banks. This requirement will affect the amount of money the banks will have available to ban: the lower the requirement, the more money the banks will have for loans: the higher the requirement, the less money the banks will have for loans.

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