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

A Critical Balance of Power

The banking industry plays a critically important role in the Federal Reserve. In designing our governance structure more than a century ago, Congress recognized that a direct connection between the Reserve Banks and the commercial banks in their respective districts produced not only a more effective central bank, but it also helped to serve as a partial counterbalance against the risk that central bank policies would be manipulated by political interests. The idea was, in part, to prevent too close of a connection between our nation’s fiscal and monetary policies.

In recent months, this has become an issue of increased focus for this Reserve Bank. In late 2015, Congress took the step of using a portion of the Federal Reserve dividend as a funding source for the Fixing America’s Surface Transportation (FAST) Act – a move that is without precedent in Fed history. Additionally, you may be aware that the Government Accountability Office (GAO) is currently in the midst of a study related to the requirement that member banks hold stock in their regional Reserve Bank. We believe that this study, which is being conducted at the request of the House Committee on Financial Services, may involve a discussion of other issues related to the Fed’s structure.

In response to this review, I recently prepared this paper, “Structure, Governance, Representation: Federal Reserve Member Banks and Federal Reserve Bank Stock,” which we have provided to the GAO along with numerous supplementary materials. Given the wide range of possible outcomes from this review, and the public questions we received after the FAST Act was adopted, I feel it is important to share my views broadly.

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.