50 Fun Facts About The Federal Reserve

Each Federal Reserve Bank issues stock that cannot be sold or traded: who is required by law to hold it?

Its member banks must buy the stock as a condition of joining, but the shares bring none of the usual control, and nearly all of the profit is handed to the US Treasury.

Which is the only US state that is home to the headquarters of two regional Federal Reserve Banks?

Missouri won two of the banks in 1914, and critics at the time linked the choice to the number of Missouri politicians then in office.

Which Federal Reserve Bank guards the world's largest known gold vault, 80 feet below street level?

New York keeps the bullion on Manhattan's bedrock, and almost all of it belongs to foreign central banks rather than to the United States.

Which Fed chair, the subject of Bob Woodward's book Maestro, held the job from 1987 to 2006?

Alan Greenspan studied clarinet at the Juilliard School and played saxophone before he turned to economics.

On a US one-dollar bill, the letter in the black seal beside Washington's portrait identifies what?

The bank that issued it is one of the regional Reserve Banks, named in the seal on $1 and $2 bills, while larger notes carry a letter-and-number code instead.

In Fed-watching slang, which bird names an official who favors higher interest rates to keep inflation low?

Hawk is the label for inflation fighters, doves put jobs first, and a centrist who sits between the two camps has been called a monetary pigeon.

Which president killed the Second Bank of the United States, a forerunner of the Fed, with an 1832 veto?

Andrew Jackson then pulled the federal deposits out of the bank, and the United States went without a central bank until the Fed opened in 1914.

Who in 2014 became the first woman to chair the Federal Reserve, and later the first to run the Treasury?

Janet Yellen is also the first person to have led all three of Washington's top economic bodies: the Fed, the Treasury and the White House Council of Economic Advisers.

Which towering Fed chair pushed interest rates to 20% in 1981 to crush double-digit inflation?

Paul Volcker stood 6 feet 7 inches, and his rate rises hurt so much that homebuilders mailed the Fed lengths of two-by-four lumber in protest.

Which president signed the Federal Reserve Act into law in December 1913, two days before Christmas?

Woodrow Wilson made the bill part of his New Freedom agenda and sought a middle ground between progressives and conservative Republicans.

Who led the Fed during the 2008 financial crisis and later shared a Nobel Prize for research on banks?

Ben Bernanke had made his name as a Princeton professor studying the Great Depression, and Time named him Person of the Year for 2009.

Which lawyer and former Carlyle Group partner chaired the Fed through the COVID-19 pandemic?

Jerome Powell was put on the Fed's board by Barack Obama, promoted to chair by Donald Trump and renominated by Joe Biden.

Which financier organized the rescue that ended the Panic of 1907, when America had no central bank?

J. P. Morgan pledged large sums of his own money and pressed other bankers to do the same, and the scare set Congress on the road to creating the Fed.

On which Georgia island did Senator Nelson Aldrich and top financiers secretly plan a central bank in 1910?

Jekyll Island's guests denied the meeting for twenty years, until a 1930 biography of Aldrich confirmed it, long after their plan had shaped the Federal Reserve Act.

Into how many districts, each with its own regional Reserve Bank, is the Federal Reserve System divided?

12 was the legal ceiling: the 1913 act allowed as few as eight districts, and the organizers chose the most it permitted.

Congress gave the Fed a dual mandate: stable prices and which other goal?

Maximum employment was written into the Fed's goals only by a 1977 reform law, more than sixty years after the central bank first opened its doors.

What annual inflation rate has the Fed officially aimed for since adopting an explicit goal in 2012?

2% has become the usual goal in rich economies, an approach pioneered in 1990 by New Zealand, where the first agreed range ran from zero up to that figure.

Alaska and Hawaii both fall within the district of the Federal Reserve Bank based in which city?

San Francisco runs the largest district by both area and population, covering nine western states and more than a third of the country's area.

Nominees to the Federal Reserve's seven-seat board are chosen by the White House and confirmed by which body?

The Senate has a say over the top job too: the chair is picked from among those already sitting on the board, for a four-year term that can be renewed.

Which benchmark, charged when US banks lend to one another overnight, is the Fed's main policy target?

The federal funds rate is steered by a committee that normally meets eight times a year, and it influences a wide range of other borrowing costs across the economy.

What name is given to the interest charged when a commercial bank borrows directly from the Federal Reserve?

The discount rate was once set below market levels, so the Fed discouraged its use, and a stigma grew up around any bank seen borrowing at the window.

Which long-standing rule, once a core tool of monetary policy, did the Fed cut to zero in March 2020?

Reserve requirements had obliged banks to hold back a fraction of their customers' deposits, until the Fed scrapped them for every depository institution on March 26, 2020.

What name is given to a central bank buying financial assets on a huge scale, as the Fed did from 2008?

Quantitative easing began in Japan, and the term dates from 1995, more than a decade before America tried the policy on a grand scale.

Which phrase describes a central bank's duty to supply emergency cash to sound banks during a panic?

Lender of last resort is traced to Sir Francis Baring, a London banker writing in 1797, more than a century before America built a central bank to play the part.

Which Fed report on regional business conditions, issued eight times a year, is named for its cover color?

The Beige Book was the Red Book until it went public in 1983, when the Fed changed the cover to a duller shade to play down its importance.

In classic open market operations, a central bank such as the Fed mainly buys and sells which assets?

Government securities are bought with newly created money, which swells the balances that commercial banks hold at the Fed and pushes borrowing costs down.

Which Rocky Mountain state has hosted the Fed's annual symposium for the world's central bankers since the early 1980s?

Wyoming's Grand Teton National Park was chosen partly to lure the Fed chairman of the day, an avid angler who enjoyed the fly fishing there.

Which Treasury secretary championed the First Bank of the United States, chartered by Congress in 1791?

Alexander Hamilton won his bank over the objections of Thomas Jefferson, but its charter ran for only twenty years and expired in 1811.

Which term describes frightened depositors all withdrawing at once, the panic the Fed was founded to stop?

A bank run can become a self-fulfilling prophecy, because every withdrawal makes failure more likely and so prompts more people to pull their cash.

Which Virginia congressman, later co-author of a famous 1933 banking law, sponsored the Federal Reserve Act?

Carter Glass later ran the Treasury under the president who signed the act, and the 1933 Glass–Steagall Act he co-wrote split investment banks from commercial ones.

Which economist argued in A Monetary History of the United States that the Fed deepened the Great Depression?

Milton Friedman wrote it with Anna Schwartz, and decades later a senior Fed official told the two authors in public that they were right and that the central bank was sorry.

Which president's feud with the Fed over cheap borrowing ended in the 1951 accord on Fed independence?

Harry Truman called the whole policy committee to the White House during the dispute, and the Treasury official who brokered the peace was made Fed chairman within weeks.

Which president's secret tapes show him pressing Fed chair Arthur Burns for easy money before an election?

Richard Nixon won in 1972, but inflation then took off, reaching double digits by 1974 as his wage and price controls began to fail.

Which Fed officials are appointed to single 14-year terms, staggered so that one begins every two years?

Board governors who complete a full term cannot be renominated, and with seven seats on the board a scheduled vacancy comes up only once every two years.

What is the name of the instant payment service, running around the clock, that the Fed launched in July 2023?

FedNow runs 24 hours a day and 365 days a year, unlike the Fed's older clearing system, which shuts on weekends and holidays.

Which 2010 law, named for a senator and a congressman, has the Fed stress-test big banks every year?

The Dodd–Frank Act was signed by Barack Obama in July 2010 as the answer to the financial crisis, and it also widened the Fed's oversight of the largest financial firms.

Which inflation gauge, rather than the better-known CPI, does the Fed use for its official inflation goal?

The PCE price index tends to run a little cooler than its famous rival, partly because it allows for shoppers switching to cheaper goods when prices rise.

Which insurance giant did the Fed rescue in September 2008 with an emergency loan of up to $85 billion?

AIG handed over warrants for a 79.9% stake in return, in what was then the largest federal bailout of a private company in American history.

Which 1961 Fed program of swapping short-term debt for long-term debt took its name from a dance craze?

Operation Twist was long judged a failure, but a 2011 study argued it had worked better than first thought, and the Fed ran a similar program that same year.

On an American check, which printed code begins with two digits that identify a regional Federal Reserve Bank?

The routing number names a Reserve Bank in its first two digits, and its fourth digit shows whether the bank sits in that Reserve Bank's own city.

Fed rate moves are quoted in which unit, so that a cut from 5% to 4.75% is a cut of 25?

Basis points, each one hundredth of a percentage point, are abbreviated to bp, which traders often pronounce as bips or beeps.

Which term describes a central bank telling markets where interest rates are likely to head in future?

Forward guidance is a recent habit: before 1994 the Fed did not even announce its decisions, and investors had to infer them from its trading over the following days.

Which phrase, also used of aircraft, describes the Fed cooling inflation without causing a recession?

A soft landing is rare: the example cited most often is the mid-1990s, when the Fed raised rates sharply and no recession followed.

Which agency, created in 1933 and separate from the Fed, insures deposits in American banks up to $250,000?

The FDIC was born in the Great Depression, after more than a third of American banks had failed, to restore trust in the banking system.

Which Wall Street investment bank was left to file the largest bankruptcy in US history in September 2008?

Lehman Brothers collapsed after rescue talks convened by the Fed broke down, and the Dow fell more than 500 points that day, its largest drop since the days after the September 11 attacks.

Which 1987 crash, the Dow's largest one-day percentage fall, led the Fed to pump in emergency cash?

Black Monday wiped 22.6 percent off the Dow in a single session, yet after swift central bank action the damage to the wider economy was limited and short-lived.

Which Utah banker, Fed chairman under President Roosevelt, is the namesake of the Fed's headquarters?

Marriner Eccles was a millionaire by 22 and kept his chain of banks standing through the Depression; Congress put his name on the building in 1982.

The 1913 Federal Reserve Act opens by promising to furnish the United States with what kind of currency?

An elastic currency answered what many economists saw as a main weakness of the old banking system: a money supply too rigid to cope when a panic struck.

Which country's central bank, founded in 1694 and nicknamed the Old Lady of Threadneedle Street, predates the Fed?

England's central bank is the world's second oldest, after Sweden's, and it stayed in private hands until it was nationalized in 1946.

Which term, popularized by British politician Iain Macleod, means high inflation alongside high unemployment?

Stagflation traps a central bank: raising interest to curb inflation can deepen unemployment, while loosening policy to create jobs can feed inflation.