How is a Federal Reserve Bank president selected?
What does the FOMC do?
The Federal Open Market Committee (FOMC) holds eight regularly scheduled meetings each year. At these meetings, the Committee reviews economic and financial conditions, determines the appropriate stance of monetary policy, and assesses the risks to its long-run goals of price stability and sustainable economic growth.
Who serves on the Federal Open Market Committee (FOMC)?
The FOMC consists of 12 members the seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining 11 Reserve Bank presidents, who serve one-year terms on a rotating basis. The rotating slots are filled from the following four groups of Banks, one Bank president from each group: Boston, Philadelphia, and Richmond; Cleveland and Chicago; Atlanta, St. Louis, and Dallas; and Minneapolis, Kansas City, and San Francisco. Nonvoting Reserve Bank presidents attend the meetings of the Committee, participate in the discussions, and contribute to the Committee's assessment of the economy and policy options. Read public speeches made by FOMC members.
What is monetary policy?
The term "monetary policy" refers to the actions undertaken by a central bank, such as the Federal Reserve, to influence the availability and cost of money and credit to help promote national economic goals. The Federal Reserve Act of 1913 gave the Federal Reserve responsibility for setting monetary policy. The Federal Reserve controls the three tools of monetary policy: open market operations , the discount rate , and reserve requirements .
When will President Plosser be a voting member of the FOMC?
President Plosser will be a voting member in 2014. Nine of the 12 Federal Reserve Bank presidents vote on the FOMC every third year on a rotating basis. The New York Federal Reserve Bank president votes every year, the Chicago and Cleveland Federal Reserve presidents vote every other year. Nonvoting Reserve Bank presidents attend the meetings of the Committee, participate in the discussions, and contribute to the Committee's assessment of the economy and policy options.
When is the next FOMC meeting?
The FOMC holds eight regularly scheduled meetings a year. At these meetings, the Committee reviews economic and financial conditions, determines the appropriate stance of monetary policy, and assesses the risks to its long-run goals of price stability and sustainable economic growth. To find out when the next FOMC meeting is, see the Board of Governors' website . Past minutes and transcripts of the meetings are also available.
What is the Aruoba-Diebold-Scotti Business Conditions Index?
The Aruoba-Diebold-Scotti business conditions index is designed to track real business conditions at high frequency. Its underlying economic indicators (weekly initial jobless claims; monthly payroll employment, industrial production, personal income less transfer payments, manufacturing and trade sales; and quarterly real GDP) blend high- and low-frequency information and stock and flow dynamics. The ADS index is updated as data on the index's underlying components are released.
How do you read the index?
The average value of the ADS index is zero. Progressively bigger positive values indicate progressively better-than-average conditions, whereas progressively more negative values indicate progressively worse-than-average conditions. The ADS index may be used to compare business conditions at different times. A value of -3.0, for example, would indicate business conditions significantly worse than at any time in either the 1990-91 or the 2001 recession, during which the ADS index never dropped below -2.0.
What is a diffusion index?
Diffusion indexes are used in the Philadelphia Fed's Business Outlook Survey, as well as in the South Jersey Business Survey. They represent the percentage of participants indicating an increase (in activity, employment, orders, etc. ) from the previous month minus the percentage of survey participants indicating a decrease.
Why are delivery times included in the Business Outlook Survey and used to compile the leading indexes?
Delivery times are a good indicator of the economy's strength because they lengthen when orders for goods increase and shorten when orders decrease. Thus, longer delivery times indicate that the economy's pace of growth is quickening, and shorter delivery times point to a slower moving economy.
What is the Beige Book?
The Beige Book is a report published eight times a year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector. An overall summary of the 12 District reports is prepared by a designated Federal Reserve Bank on a rotating basis.
What are the Coincident Indexes?
Each month the Philadelphia Fed releases coincident indexes that measure the economies in each of the 50 states. The indexes are composites of three monthly economic indicators (nonfarm employment, the unemployment rate, and average hours worked in manufacturing) and one quarterly indicator (wages and salaries). The indexes are constructed using a variation of a model designed by economists James Stock and Mark Watson.
Does the Bank report about economic conditions in its District?
Yes. Coincident indexes for the three states in the Third District are the same as those for the 50-state indexes. But because the Philadelphia Fed covers Pennsylvania, New Jersey, and Delaware, we publish more detailed press releases for those three states.
Does the Bank provide forecasts for the economies in these states?
Yes. Every month the Federal Reserve Bank of Philadelphia releases leading indexes for Delaware, New Jersey, and Pennsylvania. The leading index is a forecast of the coincident index in nine months or the growth rate in the state economies. The leading indexes are a composite of several variables, including the coincident index for each state, initial unemployment claims, housing permits, vendor delivery times, and the yield on 10-year Treasury bonds minus the fed funds rate.
Does the Bank conduct surveys about the national economy?
Yes. The Survey of Professional Forecasters is a quarterly survey of macroeconomic forecasters in the United States. More than 45 professional forecasters from across the country participate in the survey. They are asked for their expectations about many variables, including gross domestic product (GDP), chain-weighted price index, corporate profits after tax, civilian unemployment rate, industrial production index, housing starts, consumer price index, treasury bill rate, three-month, secondary market rate, discount basis, AAA corporate bond yield, and Moody's Treasury bond rate, 10-year-constant-maturity, secondary market rate.
Where do I find information about the Survey of Professional Forecasters and whom can I contact for an interview?
The spokesperson for the Survey of Professional Forecasters is Tom Stark, manager in the Bank's research department. Interview requests can be forwarded to Katherine Q. Dibling at 215-574-4119. In addition, you may listen to a pre-recorded interview with Mr. Stark. The interview is posted on our website at the same time as the release each quarter.
What is the difference between core and headline variables?
Core variables exclude food and energy because their prices are volatile and that can mean a loss of perspective for analysts charting the direction of inflation trends.
What is the anxious index?
The anxious index is the probability of a decline in real GDP in the quarter after a survey is taken. The term was first used by New York Times reporter David Leonhardt in an article on September 1, 2002. The survey asks panelists to estimate the probability that real GDP will decline in the quarter in which the survey is taken and in each of the following four quarters. The index often goes up just before recessions begin. The anxious index peaks during recessions, then declines when recovery seems near.
What is the Livingston Survey?
The Livingston Survey was started in 1946 by the late columnist Joseph Livingston. It is the oldest continuous survey of economists' expectations. Every June and December, survey participants are asked to provide forecasts for a set of key macroeconomic variables at the end of the current month, six months ahead, and 12 months ahead. They also provide forecasts for the current calendar year, and the following calendar year. In the December survey, they provide forecasts for the calendar year after next.
Where can I find out if a bank has an enforcement action against it?
Generally, the Federal Reserve takes formal enforcement actions against state member banks and bank holding companies for violations of laws, rules, or regulations, unsafe or unsound practices, breaches of fiduciary duty, and violations of final orders. Formal enforcement actions are made public through a press release that includes a copy of the order or agreement. Formal enforcement actions include cease-and-desist orders, written agreements, removal and prohibition orders, and orders assessing civil money penalties. Copies of these dating back to August 1989 are available on the Board of Governors' website.
Where can I find information on mergers, new charters, and bank failures?
Historical statistics dating back to 1990 are available from the Federal Deposit Insurance Corporation's website on new charters, mergers, and bank failures. Statistics on the latest quarterly data for FDIC-insured institutions are also available.
What is the Federal Reserve's minority-owned and de novo program for banks?
Partnership for Progress is a national outreach and technical assistance program for minority-owned and de novo financial institutions. It is intended to help guide them through the chartering process, as well as assist them as they manage initial growth and continue to expand in order to increase shareholder value. The program offers one-on-one guidance, workshops, and a web-based resource and information center. The program's development team was led by the Federal Reserve Bank of Philadelphia, which will also continue to administer the program for the Federal Reserve System. For more information or interviews with Michael Collins, senior vice president of the Supervision, Regulation and Credit Department and chairman of Partnership for Progress, or Rob Tillman, program manager, contact Marilyn Wimp at 215-574-4197.
How many minority-owned financial institutions are there?
Nationally, there are about 215 minority-owned depository institutions serving a broad range of communities and populations. The Federal Reserve has supervisory responsibility over approximately 120 bank holding companies that have minority-owned depository subsidiaries and supervises approximately 20 minority-owned institutions. Partnership for Progress is a program that provides assistance to these financial institutions. It offers one-on-one guidance, workshops, and an interactive web-based resource and information center.
How many de novo banks, or new charters, are there?
Banks are considered de novo institutions through their fifth year of operation. The banking industry experienced a recent upswing in de novo bank formations. In 2006, 148 stand-alone de novo banks were chartered across the nation, the highest level since 1999, when there were 181, and the third highest level since 1985, when there were 206. For more information about de novo banks, see the third quarter 2007 issue of the Supervision, Regulation and Credit Department's Insights.
How many employees does the Philadelphia Fed have?
We employ about 841 people.
How much cash does the Philadelphia Fed process daily?
We process about 8 million notes using six high-speed machines that detect fit, unfit, and counterfeit notes.
How much money does the Philadelphia Fed have in its vault?
The Philadelphia Fed has two cash vaults – one for currency and one for coin – each the size of a football field. On an average day, the vaults hold between $5 billion and $8 billion in currency and $50 million in coin. The Philadelphia Fed provides cash services for 300 financial institutions and their branches in its District, which includes eastern Pennsylvania, southern New Jersey, and Delaware.
How much money does the Philadelphia Fed shred?
On average, 15 to 20 percent of all notes we count get shredded, which is about $100 million on a weekly basis.
Why does the Federal Reserve Bank of Philadelphia have public art?
The Federal Reserve Bank of Philadelphia's public art is part of the Philadelphia Redevelopment Authority's Percent for Art program. Launched in 1959, the program requires developers to devote a minimum of 1 percent of construction costs for the commissioning of public art. Philadelphia became the first city in the U.S. to ratify such an ordinance, and as a result, the program became the prototype for funding public art nationwide.
What pieces of art are featured at the Philly Fed?
"White Cascade" and "Phaedrus" were created specifically for the Federal Reserve Bank of Philadelphia as part of the Philadelphia Redevelopment Authority's Percent for Art program. Both pieces of work are on public display.
What is "White Cascade"?
"White Cascade" is the largest mobile in the world. Weighing almost 10 tons, "White Cascade" is composed of 14 white aluminum discs ranging in size from 3.5 feet in diameter to 12.7 feet. The mobile is powered by an electric motor and rotates clockwise on a radius of 32.5 feet. Measuring approximately 100 feet fromÂ top to bottom, the mobile is located in the Eastburn Court of the Federal Reserve Bank of Philadelphia. Created by Alexander Calder, the mobile was dedicated on October 7, 1976.
Who is Alexander Calder?
Born in Philadelphia, Alexander Calder (1898-1976) was the grandson of Alexander Milne Calder, who sculpted many of the statues for Philadelphia's City Hall, including the large rendering of William Penn that sits atop the building. His father was also a sculptor and his mother was a portrait painter. This third-generation Calder's fame and career began when he created circus figures with cork and wood bodies and articulated wire arms and legs for the Barnum and Bailey circus.
There are Calder sculptures in many cities, museums, and institutions in the United States, Europe, Canada, and Mexico. His "White Cascade" for the Federal Reserve Bank of Philadelphia is the largest mobile in the world.
What is the sculpture located outside the Sixth Street entrance?
A triangular steel sculpture pierced with a triangular opening, "Phaedrus" was created by the noted American artist Beverly Pepper specifically for the Federal Reserve Bank of Philadelphia. The 13 steel plates that make up the abstract work weigh approximately 12 tons and rise to a height of 19 feet. The sculpture, which was dedicated on May 31, 1978, is on public display near the Bank's main entrance at Ten Independence Mall.
Who is Beverly Pepper?
Born in New York, Beverly Pepper (1922-present) studied at the Pratt Institute and the Art Students League in New York. She began her career as a painter but soon turned to sculpture. Pepper's works are on display throughout the United States, Europe, and Australia in museum collections and have been featured in numerous one-woman shows and group exhibitions around the world. Some of her earlier work includes a monumental outdoor sculpture at Dartmouth College, the Federal Building in San Diego, AT&T's Long Lines building in Bedminster, New Jersey, and the Kennedy Memorial in Rehovoth, Israel.
When can I see the works of art?
"Phaedrus" is located outside the Bank at the Sixth Street entrance. "White Cascade" is located inside the Bank at the Sixth Street entrance. Visiting hours for "White Cascade" are the same as our exhibit hours. Upon entering the building, visitors should be prepared to pass through metal detectors. Taking pictures is prohibited; however, brochures with photographs are available.
What is the Federal Reserve's process for distributing coins to financial institutions?
As a regular practice, all Federal Reserve Banks pay out circulated coin before new coin. The exception to this rule is when a new commemorative state quarter, presidential dollar, or any other newly designed coin is released by the U.S. Mint.
There have been several redesigns of the U.S. currency. What is in the works now?
Four new designs of the penny will be released throughout 2009, all of which celebrate the 200th anniversary of Lincoln's birthday. The first design, a log cabin representing Lincoln's childhood in Kentucky, was introduced on the bicentennial of his birth, February 12, 2009. The other three designs representing his life in Indiana, his service as a lawyer and legislator in Illinois, and his presidency during the Civil War will be phased in over the rest of the year at approximately three-month intervals. The penny has been part of U.S. circulating currency since 1793.
How much money do you shred on a daily basis and why?
Any note that is "unfit," or not suitable for further circulation due to its physical condition (i.e. , torn, soiled, limp, worn, or defaced), will be detected and then shredded by our machines. Approximately 15 percent to 18 percent of all currency processed on our machines is shredded because it is no longer fit for circulation. So if we process about 8 million notes per day, that means we shred between 1.2 and 1.4 million notes each day.
What happens to counterfeit notes?
All counterfeit notes uncovered during our processing are turned over to the U.S. Secret Service for further investigation. We retain the deposit strap so that the Secret Service can start its investigation with the depositing institution and reconstruct a trail to the origin of the fake currency. Most of the counterfeits we find are $20 bills.
Where is currency printed and where are coins produced?
The Bureau of Engraving and Printing's facilities in Washington, D.C. and Fort Worth print our currency. Coins are produced at the Denver and Philadelphia mints. Each Federal Reserve Bank orders new notes and coins in the amounts and denominations needed to meet local demand.
How much money does the Philadelphia Fed have in its vault?
We have two cash vaults — one for currency and one for coin — each the size of a football field. On an average day, the vaults hold between $5 billion and $8 billion in currency and $50 million in coin. The Philadelphia Fed provides cash services for 300 financial institutions and their branches in its District, which includes eastern Pennsylvania, southern New Jersey, and Delaware.
There have been several redesigns of the U.S. currency. What is in the works now?
In March 2008, the redesigned $5 went into circulation. The most recent currency redesigns began with the introduction of the new $20 in 2003, the $50 in 2004, and the $10 in 2006. The $100 note will also be redesigned. The $1 and $2 will not be redesigned.
Why are we redesigning the currency?
To stay ahead of counterfeiting. The $5 note is the lowest denomination U.S. note with both a watermark and a security thread. We are redesigning the $5 note because some counterfeiters have used the note to create higher denomination counterfeits.
Does the severity of counterfeiting warrant the money that is being spent on the redesigns?
While counterfeiting is not a significant economic problem overall, when a person or business accepts a counterfeit bill, it is a real loss to them. By continuously evaluating counterfeit threats across all denominations, introducing new designs and incorporating new security features, the government stays ahead of currency counterfeiting.
Is the $5 similar in design to the new $20, $50, and $10?
Similar to the other redesigned bills, the $5 bill will have security and design features specific to its denomination. The security features such as the watermark and security threads make it easy for consumers to check their money and the design features such as the inclusion of color make it more burdensome for counterfeiters to reproduce, as well as make the currency attractive.
I heard on the news that some of the new $5 bills were misprinted with 2006. Is that true and is the $5 bill dated 2006 being recalled?
No. Many rumors are circulating about the new $5 bill being a valuable misprint. The colorized 2006 series $5 bill was printed correctly and is not being recalled by the federal government. The series year on paper money does not coincide with the year that it was printed but relates to a major redesign or the appointment of a new Treasury secretary. Secretary Henry M. Paulson, Jr. was appointed to the Department of the Treasury in 2006. The new colorized $5 bill bears his signature as well as the year that he was appointed to office.
Where can I find comprehensive information about the financial crisis?
Where can I find recent publications produced by the Fed concerning the current financial situation?
The Federal Reserve System produces many papers, articles, and publications for consumers. Below you'll find links to recent articles that focus on the current financial crisis.
What are the Federal Reserve's credit and liquidity programs?
The Federal Reserve Board of Governors provides detailed information on the credit and liquidity programs in a series of dedicated web pages. The section includes information about the Federal Reserve's balance sheet, a discussion of Federal Reserve risk-management practices, and information on the types and amounts of collateral being pledged at various lending facilities. See the press release.
Where can I read speeches about the financial crisis?
Federal Reserve Chairman Ben Bernanke has spent many hours before Congress providing information and answering questions about U.S. financial markets and our country's economic outlook. Select the links below to read these testimonies. In addition to the Chairman, other Fed officials, including the Philadelphia Fed's president, Charles Plosser, have given speeches on the financial crisis. Read the most recent speeches about the current financial crisis.