Editing Federal Reserve (section)

==== Government regulation and supervision ====
[[File:House Financial Services Committee hearing with Ben Bernanke.jpg|thumb|right|[[Ben Bernanke]] (lower right), former chairman of the Federal Reserve Board of Governors, at a [[House Financial Services Committee]] hearing on February 10, 2009. Members of the board frequently testify before congressional committees such as this one. The Senate equivalent of the House Financial Services Committee is the [[Senate Committee on Banking, Housing, and Urban Affairs]].]]

The Federal Banking Agency Audit Act, enacted in 1978 as Public Law 95-320 and 31 U.S.C. section 714 establish that the board of governors of the Federal Reserve System and the Federal Reserve banks may be audited by the [[Government Accountability Office]] (GAO).<ref>{{Cite web |title=Frequently Asked Questions Federal Reserve System |url=http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm |archive-url=https://web.archive.org/web/20100217220435/http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm |archive-date=February 17, 2010 |access-date=February 19, 2010 |quote=The Board of Governors, the Federal Reserve Banks, and the Federal Reserve System as a whole are all subject to several levels of audit and review. Under the Federal Banking Agency Audit Act, the Government Accountability Office (GAO) has conducted numerous reviews of Federal Reserve activities}}</ref>

The GAO has authority to audit check-processing, currency storage and shipments, and some regulatory and bank examination functions–though there are restrictions to what the GAO may audit. Under the Federal Banking Agency Audit Act, 31 U.S.C. section 714(b), audits of the Federal Reserve Board and Federal Reserve banks do not include (1) transactions for or with a foreign central bank or government or non-private international financing organization; (2) deliberations, decisions, or actions on monetary policy matters; (3) transactions made under the direction of the Federal Open Market Committee; or (4) a part of a discussion or communication among or between members of the board of governors and officers and employees of the Federal Reserve System related to items (1), (2), or (3). See Federal Reserve System Audits: Restrictions on GAO's Access (GAO/T-GGD-94-44), statement of Charles A. Bowsher.<ref>{{Cite web |date=July 26, 1996 |title=Federal Reserve System Current and Future Challenges Require System-wide Attention: Statement of Charles A. Bowsher |url=http://www.gao.gov/archive/1996/gg96159t.pdf |access-date=August 29, 2011 |publisher=United States General Accounting Office |archive-date=July 9, 2011 |archive-url=https://web.archive.org/web/20110709123554/http://www.gao.gov/archive/1996/gg96159t.pdf |url-status=dead }}</ref>

The board of governors in the Federal Reserve System has a number of supervisory and regulatory responsibilities in the U.S. banking system, but not complete responsibility. A general description of the types of regulation and supervision involved in the U.S. banking system is given by the Federal Reserve:<ref>{{Harvnb|BoG|2005 | pp=4–5}}</ref>

{{Blockquote|The Board also plays a major role in the supervision and regulation of the U.S. banking system. It has supervisory responsibilities for state-chartered banks<ref>See example: {{Cite web |date=March 31, 2009 |title=Advantages of Being/Becoming a State Chartered Bank |url=http://www.state.ar.us/bank/benefits_advantages.html |access-date=August 29, 2011 |publisher=Arkansas State Bank Department |df=mdy-all}}</ref> that are members of the Federal Reserve System, [[bank holding companies]] (companies that control banks), the foreign activities of member banks, the U.S. activities of foreign banks, and [[Edge Act]] and "agreement corporations" (limited-purpose institutions that engage in a foreign banking business). The Board and, under delegated authority, the Federal Reserve Banks, supervise approximately 900 state member banks and 5,000 bank holding companies. Other federal agencies also serve as the primary federal supervisors of commercial banks; the [[Office of the Comptroller of the Currency]] supervises national banks, and the [[Federal Deposit Insurance Corporation]] supervises [[State bank (United States)|state bank]]s that are not members of the Federal Reserve System.

Some regulations issued by the Board apply to the entire banking industry, whereas others apply only to member banks, that is, [[State bank (United States)|state bank]]s that have chosen to join the Federal Reserve System and national banks, which by law must be members of the System. The Board also issues regulations to carry out major federal laws governing [[Consumer protection|consumer credit protection]], such as the [[Truth in Lending Act|Truth in Lending]], [[Equal Credit Opportunity Act|Equal Credit Opportunity]], and [[Home Mortgage Disclosure Act]]s. Many of these consumer protection regulations apply to various lenders outside the banking industry as well as to banks.

Members of the Board of Governors are in continual contact with other policy makers in government. They frequently testify before [[congressional committee]]s on the economy, [[monetary policy]], [[Bank regulation|banking supervision and regulation]], [[Consumer protection|consumer credit protection]], [[financial market]]s, and other matters.

The Board has regular contact with members of the President's [[Council of Economic Advisers]] and other key economic officials. The Chair also meets from time to time with the [[President of the United States]] and has regular meetings with the [[Secretary of the Treasury]]. The Chair has formal responsibilities in the international arena as well.}}

===== Regulatory and oversight responsibilities =====
The board of directors of each Federal Reserve Bank District also has regulatory and supervisory responsibilities. If the board of directors of a district bank has judged that a member bank is performing or behaving poorly, it will report this to the board of governors. This policy is described in law:

{{Blockquote|Each Federal reserve bank shall keep itself informed of the general character and amount of the loans and investments of its member banks with a view to ascertaining whether undue use is being made of bank credit for the speculative carrying of or trading in securities, real estate, or commodities, or for any other purpose inconsistent with the maintenance of sound credit conditions; and, in determining whether to grant or refuse advances, rediscounts, or other credit accommodations, the Federal reserve bank shall give consideration to such information. The chairman of the Federal reserve bank shall report to the Board of Governors of the Federal Reserve System any such undue use of bank credit by any member bank, together with his recommendation. Whenever, in the judgment of the Board of Governors of the Federal Reserve System, any member bank is making such undue use of bank credit, the Board may, in its discretion, after reasonable notice and an opportunity for a hearing, suspend such bank from the use of the credit facilities of the Federal Reserve System and may terminate such suspension or may renew it from time to time.<ref>{{Cite web |date=June 22, 2010 |title=U.S. Code Title 12, Chapter 3, Subchapter 7, Section 301. Powers and duties of board of directors; suspension of member bank for undue use of bank credit |url=https://www.law.cornell.edu/uscode/text/12/301- |access-date=August 29, 2011 |publisher=Law.cornell.edu}}</ref>}}