Dissonance within the Federal Reserve System

This paper analyzes the institutional framework of the Federal Reserve System. Contrary to claims that the Fed is dominated solely by private interests or by political considerations, I argue that it is a mixture of both because the Board of Governors is a government agency while the district banks are private organizations Their differing governance and accountability structures support that distinction. Yet the idea that district banks are private organizations is not widely accepted. I use budget and employment data for the district banks and the Board of Governors from the past 25 years to support my claim. I also argue that we are likely to get better monetary policy and financial oversight from the district banks than from the Board of Governors because the banks have better accountability and knowledge