FIN310 - Session 1 · The Federal Reserve FIN310

Theme:

1) Intro

The Federal Reserve is America’s central bank (created 1913). Its job is to keep money and the financial system steady.

The law gives the Fed two big goals (the dual mandate): stable prices and maximum employment.

2) History (Super short)

3) What the Fed Does

Monetary policy: sets the stance of interest rates to cool or support the economy (details in Session 2).
Supervision & regulation: checks the safety of banks and the system.
Payments & cash: runs parts of the national payments system and currency services.
Lender of last resort: provides liquidity in emergencies.

4) How It’s Organized

Board of Governors (D.C.)
  • 7 members; nominated by the President; confirmed by the Senate.
  • Serve long 14‑year staggered terms to reduce politics.
  • The Chair & Vice Chair are chosen from the Board for 4‑year leadership terms.
12 Regional Federal Reserve Banks
  • Bring local data & run operations; each led by a president.
  • Presidents are selected by regional directors and approved in D.C.
  • New York Fed runs market operations for the system.
FOMC (policy committee)
  • 12 voters: 7 Governors + 5 presidents (NY always; 4 rotate).
  • All 12 presidents discuss even when not voting.

5) Leadership snapshot (2010)

Fed Chair in 2010: Ben S. Bernanke (served 2006–2014).
This corrects the common mix‑up with Jerome Powell (Chair from 2018–present).
Recent Chairs (quick list)
  • Alan Greenspan — 1987–2006
  • Ben Bernanke — 2006–2014
  • Janet Yellen — 2014–2018
  • Jerome Powell — 2018–present

6) JU Visit (2010)

Local connection: In 2010, representatives from the Federal Reserve visited our FIN310 class at Jacksonville University to talk about careers, monetary policy, and the brand‑new era of balance‑sheet policy that began during the Great Recession.
What is QE (as of Nov 2010)?
  • Definition: Quantitative easing (QE) = the Fed buys longer‑term U.S. Treasuries (and earlier, MBS) to lower long‑term interest rates when the policy rate is near zero.
  • QE2 announcement: In November 2010, the Fed announced about $600 billion in Treasury purchases through mid‑2011.
  • Goal: Ease financial conditions, support hiring, and lift inflation back toward ~2% after the 2008–09 crisis.
How it works (plain English)
  • Fed buys bonds → bond prices riseyields fall (lower long‑term rates).
  • Lower long‑term rates → cheaper mortgages & business loans → more spending and jobs.
  • Also signals a commitment to easy policy even when the fed funds rate is near zero.
FIN310 talking points (from our class)
  • Channels: rates, portfolio rebalancing, expectations/forward guidance.
  • Debates: risk of future inflation, asset bubbles, distribution effects.
  • How to track: FOMC statements, NY Fed balance‑sheet releases, FRED charts.
Local coverage (Nov 9, 2010)

"Ben Bernanke: 'We succeeded in avoiding the financial meltdown'" — Q&A with students at JU/UNF/Rollins; topics included commodity prices, inflation outlook, AIG, and Dodd‑Frank/FSOC.

Read Jax Daily Record article

7) Videos

Paste your YouTube URLs where it says YOUR_LINK_HERE and they will embed.

The Fed Explains Monetary Policy
Open on YouTube
Open Market Operations (Philadelphia Fed · Segment 406)
Open on YouTube
Atlanta Fed: Boardroom / Directors
Open on YouTube

8) Quick Quiz (True/False)

Score: 0/5

1) The Fed’s dual mandate focuses on price stability and maximum employment.

2) In 2010, the Fed Chair was Ben S. Bernanke.

3) Governors serve 4‑year terms.

4) The FOMC has 12 voters: 7 Governors and 5 regional bank presidents.

5) The New York Fed president always votes on the FOMC.