EC233 Lecture Notes - Lecture 12: Federal Open Market Committee, Federal Reserve Act
Document Summary
Resistance to establishment of a central bank: fear of centralized power, distrust of moneyed interests (perception that central bank would take the side of commercial banks) Need for lender of last resort: nationwide bank panics on a regular basis, banking panic of 1907 so severe that the u. s. public accepted that a central bank was needed. Federal reserve act of 1913: elaborate system of checks and balances, decentralized (though not truly federal) structure. The writers of the federal reserve act wanted to diffuse power along regional lines, between the private sector and the government, and among bankers, business people, and the public. This initial diffusion of power has resulted in the evolution of the federal. Federal reserve banks: - although they are basically public-sector institutions in practice, the. Their ownership of stock is really a formality signifying their status as member banks. Nine directors appoint the president of the bank; subject to approval by.
