The Federal Reserve System, affectionately termed the Fed, is the central bank of the United States. The regulation of the banking system, consumer protection laws and the control of monetary policy to this quasi-government institution were mandated by Congress.

The Federal Reserve is independent of the Treasury, but is the Treasury Department's personal banker. The President appoints the seven governors (designating a Chair and Vice-chair) to the Board of Governors for 14-year terms, but the Senate must confirm them.  The chairman is appointed to a separate 4-year term by the president and must be chosen from the Fed governors.  The appointment to the chair must be approved by the Senate. These central bankers are not removed from office once appointed, although many have resigned before their 14-year terms expired to gain lucrative positions on Wall Street. Also, some governors are appointed to complete unfinished terms when a governor resigns and those appointees may serve less than 14 years. The Federal Reserve System provides services to the commercial banking system through the 12 district banks. The district banks also regulate and examine commercial banks. The services provided by the district banks generate revenues for the Federal Reserve System. In fact, the revenues not only support the entire system, but each year's surplus (over operating expenses) is sent to the Treasury's coffers.

There are twelve Federal Reserve Banks in addition to the Board of Governors of the Federal Reserve System in Washington, D.C.  Fed District Banks were authorized under the Federal Reserve Act of 1913.  The District Banks are independently chartered by Congress with the purpose of helping the Federal Reserve Board carrying out its functions—including monetary policy. 

The Federal Reserve System provides services to the commercial banking system through the 12 district banks. The district banks also regulate and examine commercial banks. The services provided by the district banks generate revenues for the Federal Reserve System.  Services provided include providing cash and coin also processing checks as well as providing a source of reserves when not readily available on the market.   In fact, the revenues not only support the entire system, but each year's surplus (over operating expenses) is sent to the Treasury's coffers.

Based on the Federal Reserve Act, each District Bank president is appointed by the board of directors of the District Bank for a term of five years.  However, the local board’s nomination must be approved by the Board of Governors of the Federal Reserve System.  While the Board in Washington may make suggestions behind the scenes for whom they think might be a good Bank president, the local board of directors has a lot of autonomy in picking its own nominee. The terms of all the presidents of the District Banks run concurrently, ending on the last day of February of years numbered 6 and 1 (for example, 2001, 2006, and 2011).  However, it is very unusual for a Bank president to not be re-nominated after a term is completed.  A president may be reappointed after serving a full term or an incomplete term.  Typically, a District Bank president leaves office only upon mandatory retirement upon becoming 65 years of age (with some exceptions) or due to a decision to move back to the private sector.   The District Bank presidents participate in monetary policy at the FOMC and with discount rate decisions.