Opinion ID: 3020164
Heading Depth: 3
Heading Rank: 1

Heading: Federal Reserve Banks

Text: Because the nature of Federal Reserve Banks is at issue in this case, we begin by briefly describing their history and function. The Federal Reserve Bank of New York (“New York Fed”) is one of twelve Federal Reserve Banks governed by the Federal Reserve Act (“FRA”), 12 U.S.C. § 221 et seq. The Federal Reserve Banks were established by Congress in 1913 to be the “monetary and fiscal agents of the United States.” First Agric. Nat’l Bank v. State Tax Comm’n, 392 U.S. 339, 356 (1968) (Marshall, J., dissenting). See also Federal Reserve Act of 1913, Pub. L. No. 63-43, 38 Stat. 251. To aid in achieving Congress’s goal of insulating them from political pressure, the Federal Reserve Banks are formed as corporations. 12 U.S.C. § 341. Within their respective designated territories, the Federal Reserve Banks supervise and maintain the nation’s banking system, examine the national1 and state banks that have 1 Federal Reserve Banks are not “national banks.” “National bank” denotes banks such as Citibank or Bank of America, organized under the National Bank Act. 12 U.S.C. § 21 et seq. Before the passage of the Federal Reserve Act, national banks formerly performed essential governmental monetary functions 3 purchased memberships in the Federal Reserve System, 12 U.S.C. §§ 325, 481 et seq., and clear checks and deposits between depository institutions. 12 U.S.C. § 360. The individual Federal Reserve Banks serve as the foundation for the Federal Reserve System. The presidents of the New York Fed and four other Federal Reserve Banks, along with the Board of Governors of the Federal Reserve System (“Board of Governors”), constitute the Federal Open Market Committee, 12 U.S.C. § 263, charged by Congress with: “maintain[ing] long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” 12 U.S.C. § 225a. The individual Federal Reserve Banks carry out the monetary policy so formulated. The Board of Governors, comprising seven Presidential appointees, 12 U.S.C. § 241, loosely oversees the Federal Reserve Banks’ operations. 12 U.S.C. § 248(j). The Board of Governors is empowered to levy assessments on the Federal Reserve Banks to pay expenses, 12 U.S.C. § 243, and issue governing regulations, see, e.g., 12 U.S.C. § 248-1. The Federal Reserve Banks are intimate parts of the Government’s fiscal structure. In addition to acting as the such as issuing currency. The Federal Reserve Banks have now taken over these functions, leaving little difference between national banks and state-chartered banks. We will attempt to be as precise as possible when referring to “national banks” as opposed to Federal Reserve Banks. 4 Government’s fiscal agent, the Federal Reserve Banks serve as the depository for the United States Treasury. 12 U.S.C. § 391. The United States, while not a capital stockholder in the Federal Reserve Banks, is the residual interest-holder in the unlikely event of a Federal Reserve Bank’s liquidation. 12 U.S.C. § 290. Congress has on occasion treated the Federal Reserve Banks as the Government’s own rainy day fund, directing, for example, the payment of $3.7 billion to the United States Treasury in 2000. 12 U.S.C. § 289; see also Pub. L. No. 103-66, § 3002(b), 107 Stat. 337 (1993) (directing payment of $106 Million to United States Treasury in 1997; $107 Million to United States Treasury in 1998). Collectively, the Federal Reserve Banks carry out the functions of the United States’ central bank – issuing and maintaining legal tender, i.e., Federal Reserve Notes; acting as repository of Government funds; and interacting with foreign countries’ central banks. While placed by law in a home city, each Federal Reserve Bank spans at least three states, and eleven are under the territorial jurisdiction of more than one United States Circuit Court of Appeals. The New York Fed has responsibility for all of New York, Puerto Rico, and the United States Virgin Islands, and parts of New Jersey and Connecticut.