Esther George - President and CEO of the
Federal Reserve Bank of Kansas City

A Critical Balance of Power

Congress created the Federal Reserve with a governance structure that places the central bank firmly under government oversight, but with protections designed to mitigate the risk of political manipulation. This resulting system engages the private sector to act as a partial check against the abuse of central bank policies for solely political purposes.

The 12 regional Federal Reserve Banks are sometimes referred to as the operating arms of the nation’s central bank. The Board of Governors, a government agency based in Washington, D.C. is a governmental agency with broad oversight for the entire Federal Reserve System, while each of the 12 regional Reserve Banks operate under the control of a local board of directors composed of individuals engaged in community development, business, banking and labor.

The design engages a broad spectrum of individuals from across the nation in oversight of the nation’s central bank and creates a forum for contributions to the Fed’s policy deliberations. As designed, it was also intended in part to prevent too close of a connection between our nation’s fiscal policies, as directed by the administration and Congress, and monetary policies, directed by the central bank.

You can learn more about the structure in my paper “Structure, Governance, Representation: Federal Reserve Member Banks and Federal Reserve Bank Stock.” This document was prepared at a time when there were a couple of different initiatives underway related to the role of bankers in the Fed’s structure. In addition to a Government Accountability Office (GAO) review about the requirement that member banks hold stock in their regional Reserve Bank, there had also been an unprecedented decision by Congress to divert some of the Federal Reserve dividends as a funding source for the Fixing American’s Surface Transportation (FAST) Act. While these events occurred a few years ago, the involvement of banks within the Fed’s structure is an issue that can be poorly understood and something that has emerged over time as a point of contention by the Fed’s critics. This paper explains the history of the Fed’s structure and provides insight on the role of important role of America’s banks within it.

A Corollary of Accountability: A History of FOMC Policy Communication

The revelation in the early 1990s that the Federal Open Market Committee (FOMC) had privately maintained policy meeting transcripts for years created a substantial political challenge for the Federal Reserve. But it also opened the door to a new era of policy transparency that would have been unimaginable through much of the Fed’s history.

Highways of Commerce: Central Banking and the U.S. Payments System

Explore the history behind the Federal Reserve's current roles as overseer and participant in the payments system and the often contentious debate over the central bank's responsibilities.

Under Pressure: Politics and the Federal Reserve During the 1990-1991 Recession

During the U.S. recession of 1990-91, the Federal Reserve came under intense pressure from political forces seeking to influence monetary policy. This book examines the role of politics on the Federal Open Market Committee at that time and highlights the importance of the Fed's independence and decentralized structure.

The Balance of Power: The Political Fight for an Independent Central Bank

This book provides an overview of the relationship between the Federal Reserve's political and independent elements.

Confidence Restored: The History of the Tenth District's Federal Reserve Bank

This book offers a detailed look at the Kansas City Fed's history through the leaders and innovation that shaped our organization into what it is today.

Integrity, Fairness and Resolve: Lessons from Bill Taylor and the Last Financial Crisis

This brief biography focuses on the leadership of the Fed's long-time head of banking supervision during the financial crisis of the 1980s and the parallels to today's turmoil.

System Structure

The Federal Reserve System’s decentralized structure is designed to ensure representation and operational effectiveness.

Fed and You Video

The Federal Reserve Bank of Kansas City serves as the Heartland’s connection to the nation’s central bank. Learn more in this video.

Century of Confidence Video

For more than a century, the Federal Reserve Bank of Kansas City has provided stability across its region. This documentary from PBS affiliate KCPT tells the story of the Bank.


Learn more about the Federal Reserve’s structure with this list of frequently asked questions and answers.