I really do not understand much about the Federal Reserve. Since it was established through an act of Congress, how much power does the president have to shape it any way?
he appoints the different chairs - similar to the supreme court or the rest of his cabinet, but they serve a set determined # of years. By having a majority on the board his economic policies should hold sway.
IIRC that is in dispute. Some even speculate that JFK was killed because he intended to end the Fed.
Even more so than the Supreme Court it was designed to stand outside the Government. It is a private organization, not a part of the Government (like Fannie May, the closest I can think of).
It was created by Congress, so it could be uncreated by Congress, but as long as it exists (or unless it's charted is modified) it's pretty untouchable.
Board of Governors of the Federal Reserve System: "The seven members of the Board are appointed by the President of the United States for staggered 14-year terms."
So like the Supreme Court any given president might not get to change out the occassional Governor. In addition that Governors of the Regional Federal Reserve banks are appointed by the member banks. The following description is from the New York Fed's home page:
Appointments to the Board By law, the president of the United States must make appointments to the Board that yield a "fair representation of the financial, agricultural, industrial, and commercial interests and geographical divisions of the country." The country is divided into 12 Federal Reserve Districts, and no two governors may come from the same District.My simple answre to your question how much power does the president have to shape it any way?Some, but not that much in the short term. Assuming the POTUS has two terms, more, but still less than any other agency.The governors are appointed for 14 years, and the terms are staggered, with one expiring on January 31 of every even-numbered year. A governor who has served a full 14-year term may not be reappointed, but someone who was appointed to complete an unexpired term may be reappointed to a full 14-year term. Once appointed, governors cannot be removed from office for their policy views.
The length of the terms and the staggered appointments process are intended to contribute to the insulation of the Board—and the Federal Reserve System—from day-to-day political pressures to which it might otherwise be subject. If all governors serve full terms, a U.S. president would be able to appoint only two governors in a four-year presidential term and four—a majority of the governors—during eight years in office. In reality, however, many governors leave before completing their 14-year terms, and recent presidents have made more than one appointment to the Board every two years.
As stipulated in the Banking Act of 1935, one of the seven governors is appointed by the U.S. president to a four-year term as chairman. This selection must be confirmed by the Senate. The chairman serves as public spokesperson and representative for the Board, manager of the Board's staff, and chairman at Board meetings. Ben S. Bernanke was sworn in on February 1, 2006, as chairman and a member of the Board of Governors of the Federal Reserve System. He also chairs the Federal Open Market Committee, the System's principal monetary policymaking body. Chairman Ben Bernanke replaced Alan Greenspan, whose tenure spanned from August 11, 1987, to January 31, 2006.