DS News

56 DS News Government Progress Report k ey per sonnel Janet L. Yellen Chair Stanley Fischer Vice Chairman Daniel K. Tarullo Board Member Jerome H. Powell Board Member Lael Brainard Board Member Eric S. Belsky Director of Consumer and Community Affairs, to begin in August 2014 DS News Housing Score B According to the Fed, homeowners' equity has risen to reach more than $10 trillion for the first time since 2007, totaling $10.026 trillion at the end of 2013. Homeowners' equity has risen sharply since the beginning of 2012, with equity up 60 percent, or more than $3.7 trillion, as of Q4 2013. The change in equity since April 1, 2009, now stands at more than $3.9 trillion. BUSINESS SCOPE The Fed, being the central bank of the United States, plays a major role in the supervision and regulation of U.S. financial institutions and their activities. MISSION » The Fed was created on December 23, 1913, with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907. » The Fed's mandate grew to include setting certain interest rates, controlling inflation, regulating banks, and reaching full employment. » Currently, the Fed has legal independence from the White House and Congress, but a representative must make frequent Congressional appearances. » Duties of the Fed have expanded over the years and now include conducting the nation's monetary policy, supervising and regulating banking institutions, maintaining the stability of the financial system, and providing financial services to depository institutions, the U.S. government, and foreign official institutions. » Among its many divisions and functions, the Division of Consumer and Community Affairs ensures that the voices and concerns of consumers and communities are represented at the Federal Reserve. It has primary responsibility for carrying out the Board of Gover- nors' consumer financial protection and community development programs including oversight of the Consumer Financial Protection Bureau (CFPB). EVALUATION » According to the Fed's 2013 annual report, the Bank Holding Company (BHC) Consolidated Supervision Program reviewed more than 120 bank and financial holding companies to ensure that consumer compli- ance risk was appropriately incorporated into the consolidated risk assessment for the organization. » The bank's staff continued to monitor compliance with the provisions of the consent orders implement- ed in 2011 and 2012 at the six mortgage servicers and 10 BHCs for which the Federal Reserve has supervisory authority to determine if deficiencies were corrected. » They also continued to work through the implementa- tion of the Interagency Memorandum of Understand- ing on Supervision Coordination with the CFPB. This agreement is intended to establish arrangements for coordination and cooperation between the CFPB and the OCC, Federal Deposit Insurance Corporation (FDIC), National Credit Union Association (NCUA), » and the Board of Governors to avoid unnecessary duplication of effort and conflicting supervisory direc- tives among the regulators. » The Federal Reserve received 27,720 consumer inquiries in 2013, covering a wide range of topics. Consumers were typically directed to other resources including other federal agencies or written materials to address their inquiries. NEGATIVE FEEDBACK » The Fed is a huge organization, and for years critics have said it should be audited to gain insight into its operations. They say that the Fed has little to no transparency, has functioned without congressional approval or oversight, and creates and loans U.S. dollars based on a monetary policy determined by its own interests. » Basically, the Fed answers to no one. Members of the board are appointed for a set term and only in extraordinary circumstances can they be removed. In addition, much of what they do is hidden from the public. Many people believe that this is unacceptable in a democratic society. » The main criticism of the Federal Reserve System is that they have made mistakes in managing the economy. Some economists have said that the Fed was responsible for the housing bubble that occurred prior to the 2007 recession by artificially favoring certain sectors of the economy. » They also claim that the Fed kept interest rates too low following the 2001 recession, which led to a credit crunch. $35 billion in monthly purchases of mortgage-backed securities and Treasury securities $4.3 trillion total assets of the Federal Reserve $2.7 trillion total reserve balances with Federal Reserve Banks $1.6 trillion of mortgage-backed securities held outright $1.4 trillion Federal Reserve notes outstanding The Federal Reserve System (The Fed) | CORPORATE HEADQUARTERS: Washington, D.C., with regional offices in Atlanta, Chicago, Dallas, Pasadena, and Philadelphia. $35 BILLION $4.3 TRILLION $2.7 TRILLION $1.6 TRILLION $1.4 TRILLION as of June 2014

• Cover