Powers and Responsibilities The board is responsible for the success of the system and is clothed with great powers, the chief of which are as follows: 1. To examine the federal reserve banks and member banks, and to require weekly statements from the reserve banks.
2. To permit or, on the affirmative vote of at least five members of the board, to require, federal reserve banks to rediscount the discounted paper of other federal reserve banks at rates fixed by the board.
3. To suspend reserve requirements for limited times under certain conditions.
4. To supervise and regulate, through the Comptroller of the Currency, the issue and retirement of federal reserve notes.
S. To add to the number of cities classified as reserve and central reserve cities, or to reclassify them, or to ter minate their designation as such.
6. To suspend or remove any officer or director of any federal reserve bank.
7. To require the writing off of doubtful or worthless assets upon the books and balance sheets of federal reserve banks.
8. To suspend, for violations of law, the operations of any federal reserve bank, to take possession of it, adminis ter it during suspension, and, when deemed advisable, to liquidate or reorganize it.
9. To require bonds of federal reserve agents; to make re gulations for the safeguarding of all collateral, bonds, federal reserve notes, money, etc.; to prepare rules and regulations for the conduct of all business required under the law; and to employ such attorneys, experts, etc., as may be deemed necessary to the conduct of the board.
io. To permit or compel federal reserve banks to establish branches within their districts, and to permit them to establish branches, agencies, or correspondents abroad or in our insular possessions, and to authorize member banks to establish branches abroad.
r. To require federal reserve banks to buy from member banks at par the 2 per cent bonds offered by them for sale.
12. To readjust federal reserve districts.
13. To assess the expenses of the Board upon the federal reserve banks.
14. To define the character of paper eligible for discount for member banks, and prescribe rules and regulations as to rediscounting and open-market operations.
15. To review and determine the rates of discount fixed by the federal reserve banks.
16. To act as a clearing house for the federal reserve banks, and to require the reserve banks to act as clearing houses for member banks.
Administrative Duties The business of the Federal Reserve Board is handled through committees of the members, who prepare the matters to be acted upon and report them to the full board for determination. The board appoints all its officers and employees, with the exception of the governor and vice-governor, who are designated by the President. The main offices are in the Treasury Building at Washington, where meetings are held at various times during the week as business requires.
The administrative duties consist of such regular and re curring duties as approving discount rates, granting power to members to accept bills drawn upon them up to zoo per cent of their capital and surplus, preparation of reports, determination of salaries, passing on increases and decreases of capital stock of the reserve banks, and so forth, and of such occasional duties as may arise in the execution of the law.
During the period of organization and development the board had to determine its general policies and prepare rules and regula tions governing the operations of the system. This work has been constructive and highly important, and in carrying it out the board consulted freely with reserve bank officials, the advisory council, and others. Periodical conferences are held with the various federal reserve agents and with the various governors of the federal reserve banks, both of which classes are organized and have frequent conferences among themselves. In this way a high degree of unity, uniform practice, and co-operation has been achieved in our system. The board refrains from interfering with the local administrative practice of the reserve banks except where necessary to effect uniformity.
The preparation of rules and regulations and of definitions is a very difficult and important part of the board's work. Even after the rules and regulations are fixed, they are subject to change, but since they affect vitally the conduct of banking and business in general, it is desirable that they be fixed in as nearly permanent a form as possible. The volume of this sort of work, however, will decline as the system gets established. The board has also been active in educational work, through the publication of reports, circulars, and press statements, and through lectures by its members.