The administrative center of the Fed is the seven-member Board of Governors. Each member serves a fourteen-year term by presidential appointment. Although the terms are normally arranged so that a different board member’s term expires every two years, this timing can be disrupted by resignations or deaths, as has happened several times in recent decades.

The staggered timing of the terms is another facet of the Fed’s design that was intended to insulate its decision-making from contemporary political pressures. A board member is only permitted to serve one full term.At any given time, two of the board members are serving four-year terms as Chairperson and Vice Chairperson, also by presidential appointment.The United States is divided into twelve Federal Reserve Bank Districts, each with its own Federal Reserve Bank, located in one of the major cities of the district.

The twelve Reserve Banks are located in New York, Philadelphia, Richmond (Virginia), Cleveland, Atlanta, Chicago, Dallas, Kansas City The twelve-member Federal Open Market Committee (FOMC) is the division within the Fed which actually formulates monetary policy, and directs the open market operations. All seven members of the Board of Governors serve on the FOMC, along with the president of the New York Federal Reserve Bank, and four of the remaining eleven Reserve Bank presidents. The remaining seven Reserve Bank presidents with no voting rights on the FOMC are nevertheless present at all meetings, and are permitted to participate in deliberations. All eleven of the Bank presidents outside of New York ultimately serve on the FOMC, through rotation.

Traditionally, the FOMC chooses the Chair of the Federal Reserve Board as its Chair, and the president of the New York Bank as its Vice Chair, though neither appointment is compelled by regulation.The responsibilities of the Board of Governors are all linked to the regulation of depository institutions, or monetary policy, or both. The Board supervises the twelve regional Federal Reserve Banks. They regulate bank holding companies and foreign-owned banks doing business in the United States. They supervise member banks, and regulate consumer finance.

Discount rates are proposed by the Federal Reserve Banks, and are confirmed or denied by the Board of Governors.Finally, it is the twelve Federal Reserve Banks which have the responsibility to lend funds to depository institutions (at their discretion), provide the currency, clear checks, and administer U.S. government debt and cash balances.