Federal Reserve Act (1913)

1) Link to the Text of the Act
Read the statute (12 U.S.C. § 221 et seq.)

2) Why It Was Done
Enacted to create a central banking system for the United States. The Act established the Federal Reserve System to provide a safer, more flexible, and more stable monetary and financial system.

3) Pre-existing Law or Constitutional Rights
Before 1913, the U.S. lacked a true central bank. Banking panics in the late 19th and early 20th centuries, especially the Panic of 1907, exposed the need for a lender of last resort and coordinated monetary policy.

4) Overreach or Proper Role?
Supporters argue the Fed provides stability and modern tools for economic management. Critics contend it concentrates too much power in an unelected body and fuels inflation or asset bubbles through monetary interventions.

5) Who or What It Controls

• Federal Reserve Board of Governors (central policymaking body)
• Federal Reserve Banks (regional banks)
• Member banks (national banks required to join, state banks optional)
• Monetary supply, interest rates, and credit conditions nationwide

6) Key Sections / Citations

• 12 U.S.C. § 221 (short title and definitions)
• 12 U.S.C. § 225a (monetary policy objectives)
• 12 U.S.C. § 248 (powers of the Federal Reserve Board)
• 12 U.S.C. § 342 (discounting commercial paper)

7) Recent Changes or Live Controversies

• Expanded powers after the 2008 financial crisis (quantitative easing, emergency lending)
• COVID-19 pandemic stimulus programs broadened its scope further
• Ongoing debates about transparency, independence, and its role in addressing climate and digital currencies

8) Official Sources

• U.S. Code – Title 12, Chapter 3
• Federal Reserve – History

• Finance
• Banks
• Federal Reserve
• Monetary Policy
• Currency