The salary for the Chairman of the Federal Reserve is set by the U.S. Congress. For 2019, the annual salary for the Fed Chairman is $203,500. The annual salary of the other Fed Governors is $183,100. The members of the Board of Governors, including the Chairman, are nominated by the President of the United States and confirmed by the Senate. The full term of a Governor is 14 years.
The Federal Reserve, also referred to as “the Fed,” is the central of the United States. The Fed’s main responsibilities are to control interest rates, the nation’s supply of money, and to oversee the banking system. The Fed was initiated by Congress in 1913 after President Woodrow Wilson signed the Federal Reserve Act into law.
The main reason the Fed was created was so that the nation would have a safer and more stable, yet flexible, monetary financial system. The main categories of responsibilities of the Fed are:
- Steering America’s monetary policy in a favorable direction by influencing money and credit conditions in the U.S. economy to gain full employment and stable prices.
- Managing and regulating banks to guarantee the safety and sustainability of the nation’s banking and financial system.
- Protecting consumers’ credit rights.
- Restraining systemic risks that may take place in the financial markets.
- Being a provider to the U.S. government of certain financial services, U.S. financial institutions and foreign institutions.
- Operating and overseeing the country’s payments systems.
What Does the Chair of the Federal Reserve Do?
The Chair of the Federal Reserve heads the United States central banking system and is the executive officer of the Board of Governors of the Federal Reserve System. The law mandates that the Chair report to Congress twice annually on what the Fed’s movements have been with regard to monetary policy. The Chair also testifies before Congress on an array of other financial matters.
The Fed Chairman meets from time to time with the President of the United States. He or she meets on a regular basis with the President’s Council of Economic Advisers and other economic officials such as the Secretary of the Treasury.
How Does Someone Become the Chairman of the Federal Reserve?
The Banking Act of 1935 authorizes the President of the United States to appoint seven members of the Board of Governors of the Federal Reserve System. These members must be confirmed by the Senate. From that group of appointed governors, the President nominates the Chair and the Vice-Chair. They are also subject to Senate approval.
What Experience Does the Chairman of the Federal Reserve Have?
The candidate for Chairman of the Federal Reserve typically comes from a background in economics, although the person the President nominates can have a diverse set of experiences. For example, they may have worked in law, education, business, the military, or have held a position in a government post.
How Long Does the Federal Reserve Chair Stay in Office?
All seven members of the Board of Governors of the Federal Reserve System serve for 14 years in their posts. The Chair and the Vice-Chair are picked from the sitting governors, who then serve in those leadership roles for the remainder of their 14-year terms.
The Chairman of the Federal Reserve is one of the most powerful persons in the United States, and indeed, the world. Because America is an economic leader, banking here can affect worldwide financial markets. For that reason, the Chairman is held accountable by Congress for banking policy changes and outlook for cash to support American business.
Bank regulation remains one of the more controversial duties of the Fed Chairman. The most recent recession is said by some to have been the direct result of Fed policies.