What is a board of governors?
A board of governors is a group of people who oversee or manage the operation of an institution. The US Postal Service, the BBC, the World Bank, numerous colleges and universities, as well as professional organizations, such as the CFA Institute, and regulatory bodies, such as the Financial Industry Regulatory Authority (FINRA), have boards of directors. .
In the financial world, the best known board of governors is the Federal Reserve, the central bank of the United States.
- A board of governors is a group of people appointed to oversee the operations of an organization, including financial affairs.
- The best known board of governors is the Federal Reserve, whose responsibilities include analyzing national and international economic developments and overseeing the operations of the Federal Reserve Banks.
- A board of directors, with functions similar to those of a board of governors, is a designated group that oversees the business of a corporation.
- Most of the time, the board of governors is elected by the shareholders of a company or the top management of an institution. In the case of the US Federal Reserve, the president nominates the board and the Senate confirms them.
- A competent and well-organized board of governors is considered a key component of an organization’s success.
Understanding a board of governors
The board of governors of the US central bank is made up of seven people who are appointed by the president and confirmed by the Senate. The members of the board of governors serve 14-year terms, which are staggered to ensure continuity.
Only one governor can represent a Federal Reserve District.
Legally, appointments to the board must consist of a “fair representation of the financial, agricultural, industrial and commercial interests and geographic divisions of the country.” In practice, appointments have been predominantly from academics and former banking professionals.
Duties of the Federal Reserve Board of Governors
The board of governors has seven of the 12 seats on the Federal Open Market Committee (FOMC), the body responsible for setting US monetary policy. The current Federal Reserve Board only has six members, with one vacancy. The presidents of five of the 12 regional reserve banks constitute the remaining members of the FOMC. The chairman of the Fed’s board of governors is responsible for chairing the FOMC.
The Federal Reserve Board analyzes national and international economic developments, supervises and regulates the operations of the Federal Reserve Banks, has responsibility for the United States payment system, and supervises and administers most credit protection laws. to the consumer.
The board has authority over changes in reserve requirements and must approve any change in the discount rate initiated by a Federal Reserve Bank.
Board members often testify before Congressional committees on economics, monetary policy, banking supervision and regulation, consumer credit protection, and financial markets. In addition, they are responsible for overseeing the work of the Fed’s regional banks, including approving budgets and appointing directors.
Presidents of the Board of Governors
The current chairman of the Federal Reserve is Jerome Powell. Recent and notable chairmen of the Fed’s Board of Governors include Janet Yellen, the first woman to be appointed, who served between 2014 and 2018; Ben Bernanke, who led the Fed from 2006 to 2014, overseeing a series of unconventional monetary policy actions to address the 2007-2008 financial crisis and the recession that followed; and Alan Greenspan, whose time as president spanned nearly 20 years and four presidential administrations.
There have been a total of 16 chairmen of the United States Federal Reserve Board of Governors.
Board of Governors vs. Board of Directors
Non-profit organizations, government divisions, and higher academic institutions often have a board of governors, rather than a board of directors, as the governing body. Corporations, as required by law, have a board of directors appointed to oversee financial decisions and business operations.
Often when there are two or more boards within an entity, the board of governors is the supreme decision-making authority.
Board of Governors FAQs
How many governors can serve on the Federal Reserve Board of Governors?
A maximum of seven governors can serve on the Federal Reserve Board of Governors.
Who appoints and confirms the Fed’s Board of Governors?
The governors of the Federal Reserve Board of Governors are nominated by the President of the United States of America and confirmed by the United States Senate.
Why are Fed governors appointed for staggered 14-year terms?
The purpose of the staggered terms is to ensure stability and continuity over time. “
Who are the current Board of Governors?
The current members of the Federal Reserve Board of Governors are Jerome H. Powell, Richard H. Clarida, Randal K. Quarles, Michelle W. Bowman, Lael Brainard, and Christopher J. Waller.
Who is the current chairman of the Federal Reserve?
The current Chairman of the Federal Reserve is Jerome H. Powell.
What are the 12 Federal Reserve Banks?
The 12 Federal Reserve Banks are the Federal Reserve Banks of San Francisco, Minneapolis, Dallas, Kansas City, St. Louis, Chicago, Cleveland, Atlanta, Boston, New York, Richmond, and Philadelphia.
The bottom line
A board of governors is a group of highly qualified individuals who are responsible for overseeing and managing an institution. Most institutions, from corporations to nonprofits, media and government agencies, have a board of governors. The best known board of governors is the US Federal Reserve Board.