The Federal Reserve Bank of San Francisco was established under the Federal Reserve Act in 1914 and is subject to the general oversight and supervision of the Board of Governors of the Federal Reserve System, in Washington, D.C. The San Francisco Fed is governed by a nine‐member board of directors. Each of the four branches in Los Angeles, Portland, Salt Lake City and Seattle also has a separate seven‐member branch board. The duties and responsibilities of the head office directors are set forth in the Federal Reserve Act, the San Francisco Fed’s bylaws, the charters for the directors’ committees, and Board of Governors’ policies.
Boards of Directors and Responsibilities
The roles of Reserve Bank directors are in three principal areas: overseeing the management of the Reserve Banks and Branches, participating in the formulation of national monetary and credit policies, and acting as a “link” between the government and the private sector.
In the exercise of its administrative responsibilities, a Reserve Bank’s head office board of directors reviews and establishes with management the Bank’s annual goals and objectives, reviews and approves the budget, and conducts an independent appraisal of the performance of both the Bank (including its efficiency and productivity) and its president and first vice president.
The Reserve Bank directors supervise, through a general auditor whom they appoint, and who reports directly to them, the maintenance of an effective system of internal auditing procedures.
Directors have a special role with respect to monetary policy and credit policy. In this function, directors, with their diverse backgrounds, bring to the Federal Reserve System the greatest benefits of regional autonomy: separate and eclectic viewpoints on economic and credit conditions. This input helps the Federal Reserve anticipate changing trends in the economy. At board meetings, they also have an opportunity to express their views as to whether monetary policy is “about right, too tight, or too easy.” The Federal Reserve Act gives each Reserve Bank the power to establish discount rates, subject to review and determination by the Board of Governors.
Another principal responsibility of each head office Reserve Bank board is to select a president who, in its judgment, will be qualified to participate in the monetary policy deliberations and decisions of the Federal Open Market Committee. Effective July 21, 2010, the Dodd‐Frank Act allows only Class B and Class C directors to participate in the president appointment process.
The Reserve Bank’s bylaws make clear that particular bank supervisory and regulatory matters do not fall within the purview of the board of directors. Further, Class A directors may not participate in personnel or budget decisions related to the Reserve Bank’s Bank Supervision and Regulation Function. These constraints are designed to minimize the risk of an actual or perceived conflict of interest at the board of directors level.