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The Federal Reserve Bank of New York is one of the 12
Federal Reserve Bank A Federal Reserve Bank is a regional bank of the Federal Reserve System, the central banking system of the United States. There are twelve in total, one for each of the twelve Federal Reserve Districts that were created by the Federal Reserve ...
s of the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
. It is responsible for the Second District of the
Federal Reserve System The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after ...
, which encompasses the State of New York, the 12 northern counties of New Jersey, Fairfield County in
Connecticut Connecticut () is the southernmost state in the New England region of the Northeastern United States. It is bordered by Rhode Island to the east, Massachusetts to the north, New York (state), New York to the west, and Long Island Sound to the ...
,
Puerto Rico Puerto Rico (; abbreviated PR; tnq, Boriken, ''Borinquen''), officially the Commonwealth of Puerto Rico ( es, link=yes, Estado Libre Asociado de Puerto Rico, lit=Free Associated State of Puerto Rico), is a Caribbean island and unincorporated ...
, and the U.S. Virgin Islands. Located at
33 Liberty Street The Federal Reserve Bank of New York Building, also known as 33 Liberty Street, is a building in the Financial District of Lower Manhattan in New York City, which serves as the headquarters of the Federal Reserve Bank of New York. The building ...
in Lower Manhattan, it is by far the largest (by assets), the most active (by volume), and the most influential of the Reserve Banks. The Federal Reserve Bank of New York is solely responsible for implementing monetary policy on behalf of the Federal Open Market Committee and acts as the market agent of the entire Federal Reserve System (as it houses the Open Market Trading Desk and manages System Open Market Account). It is also the sole fiscal agent of the
U.S. Department of the Treasury The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and ...
, the bearer of the Treasury's General Account, and the custodian of the world's largest gold storage reserve. Aside from these distinct functions, the New York Fed also performs the same responsibilities and tasks as the other Reserve Banks do, such as supervision and research. Given its central role within the Federal Reserve System, the New York Fed and its president are therefore considered first among equals among the other regional Reserve banks. Its current president is John C. Williams.


Establishment

The Federal Reserve Bank of New York opened for business on November 16, 1914, under the leadership of Benjamin Strong Jr., who had previously been president of the Bankers Trust Company. He led the Bank until his death in 1928. Strong became the executive officer (then called the "governor"—today, the term would be "president"). As the leader of the Federal Reserve's largest and most powerful district bank, Strong became a dominant force in U.S. monetary and banking affairs. One biographer has termed him the "de facto leader of the entire Federal Reserve System". This was not only because of Strong's abilities, but also because the central board's powers were ambiguous and, for the most part, limited to supervisory and regulatory functions under the 1913
Federal Reserve Act The Federal Reserve Act was passed by the 63rd United States Congress and signed into law by President Woodrow Wilson on December 23, 1913. The law created the Federal Reserve System, the central banking system of the United States. The Pani ...
because many Americans were antagonistic to centralized control. When the United States entered
World War I World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was List of wars and anthropogenic disasters by death toll, one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, ...
, Strong was a major force behind the campaigns to fund the war effort via bonds owned primarily by U.S. citizens. This enabled the United States to avoid many of the post-war financial problems of the European belligerents. Strong gradually recognized the importance of
open market operation In macroeconomics, an open market operation (OMO) is an activity by a central bank to give (or take) liquidity in its currency to (or from) a bank or a group of banks. The central bank can either buy or sell government bonds (or other financial ...
, or purchases and sales of government securities, as a means of managing the quantity of money in the U.S. economy and thus affecting interest rates. This was particularly important at the time because gold had flooded into the United States during and after World War I. Thus, its gold-backed currency was well-protected, but prices had been pushed up substantially by the currency expansion due to the
gold standard A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from th ...
-imposed expansion of currency. In 1922, Strong unofficially scrapped the gold standard and instead began aggressively pursuing open market operations as a means of stabilizing domestic prices and thus internal economic stability. Thus, he began the Federal Reserve's practice of buying and selling government securities as monetary policy.
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
, a prominent British economist who had previously not questioned the gold standard, used Strong's activities as an example of how a central bank could manage a nation's economy without the gold standard in his book '' A Tract on Monetary Reform'' (1923). To quote one authority:
It was Strong more than anyone else who invented the modern central banker. When we watch ... entral bankers of todaydescribe how they are seeking to strike the right balance between economic growth and price stability, it is the ghost of Benjamin Strong who hovers above him. It all sounds quite prosaically obvious now, but in 1922 it was a radical departure from more than two hundred years of central banking history.
Strong's policy of maintaining price levels during the 1920s through open market operation and his willingness to maintain the liquidity of banks during panics have been praised by
monetarist Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on natio ...
s and harshly criticized by Austrian economists. With the European economic turmoil of the 1920s, Strong's influence became worldwide. He was a strong supporter of European efforts to return to the gold standard and economic stability. Strong's new monetary policies not only stabilized U.S. prices, they encouraged both U.S. and world trade by helping to stabilize European currencies and finances. However, with virtually no inflation, interest rates were low and the U.S. economy and corporate profits surged, fueling the stock market increases of the late 1920s. This worried him, but he also felt he had no choice because the low interest rates were helping Europeans (particularly Great Britain) in their effort to return to the gold standard. Economic historian Charles P. Kindleberger states that Strong was one of the few U.S. policymakers interested in the troubled financial affairs of Europe in the 1920s, and that had he not died in 1928, just a year before the
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
, he might have been able to maintain stability in the international financial system. A public competition for the design of the building was held and the architectural firm of York and Sawyer submitted the winning design. The Bank moved to the new
Federal Reserve Bank of New York Building The Federal Reserve Bank of New York Building, also known as 33 Liberty Street, is a building in the Financial District of Lower Manhattan in New York City, which serves as the headquarters of the Federal Reserve Bank of New York. The buildi ...
in 1924.


Responsibilities

Since the founding of the Federal Reserve system, the Reserve Bank of New York has been the place where monetary policy in the United States is implemented, although policy is decided in Washington, D.C. by the Federal Open Market Committee (FOMC). It is the only Reserve Bank with a permanent seat on the Committee, and its president is traditionally selected as the Committee's vice chairman. Operating in the financial capital of the U.S., the Bank conducts open market operations—the buying and selling of outstanding
Treasury securities United States Treasury securities, also called Treasuries or Treasurys, are government debt instruments issued by the United States Department of the Treasury to finance government spending as an alternative to taxation. Since 2012, U.S. go ...
and agency securities—through its trading desk. Like other regional Reserve Banks, the Reserve Bank of New York distributes coins and currency, participates in the
Fedwire Fedwire (formerly known as the Federal Reserve Wire Network) is a real-time gross settlement funds transfer system operated by the United States Federal Reserve Banks that allows financial institutions to electronically transfer funds between it ...
system that transfers payments and securities between domestic banks, and conducts economic research. The Bank is the exclusive fiscal agent of the U.S. Treasury. In this role, it conducts all primary auctions of marketable Treasury securities, as well as government buybacks when authorized. It carries out
exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of t ...
policy by swapping dollars with foreign currencies under the Treasury's direction. The Treasury receives all direct federal revenue and borrowed funds, and pays nearly all federal expenses, through its General Account at the Reserve Bank of New York. The Bank's underground gold bullion depository lies below street level and below sea level, resting on Manhattan bedrock. By 1927, the vault contained 10% of the world's
official gold reserves A gold reserve is the gold held by a national central bank, intended mainly as a guarantee to redeem promises to pay depositors, note holders (e.g. paper money), or trading peers, during the eras of the gold standard, and also as a store of v ...
. The vault (designed by
Frederick S. Holmes Frederick S. Holmes was an American safe and vault engineer aninventorwho designed the largest vaults in the world. During his career, Holmes designed hundreds of vaults throughout the United States, Canada and Japan from 1895 to 1941. The majo ...
) is the largest known and confirmed gold store in the world, and holds approximately of gold bullion, more than Fort Knox does. The gold does not belong to the Bank, which transferred all of its domestic gold reserves to the Treasury under the
Gold Reserve Act of 1934 The United States Gold Reserve Act of January 30, 1934 required that all gold and gold certificates held by the Federal Reserve be surrendered and vested in the sole title of the United States Department of the Treasury. It also prohibited the Tre ...
. Nearly 98% of it belongs to the central banks of foreign governments. The rest belongs to the United States and international organizations such as the
IMF The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glob ...
. The Bank stores the gold at no charge, but charges for handling whenever it is moved. The Bank publishes a monthly recession probability prediction derived from the yield curve and based on the work by Esteban Rodriguez Jr. Their models show that, when the difference between short-term interest rates (using three-month
T-bills United States Treasury securities, also called Treasuries or Treasurys, are government debt instruments issued by the United States Department of the Treasury to finance government spending as an alternative to taxation. Since 2012, U.S. gov ...
) and long-term interest rates (using ten-year Treasury notes) at the end of a Federal Reserve tightening cycle is negative or less than 93 basis points positive, a rise in unemployment usually occurs.


Branch

The Federal Reserve Bank of New York Buffalo Branch was the Bank's only branch. It was formally disbanded on October 31, 2008.


Criticisms

In 2009, the Bank commissioned a probe into its own practices. David Beim, finance professor at Columbia Business School submitted a report in 2009, released by the
Financial Crisis Inquiry Commission The Financial Crisis Inquiry Commission (FCIC) was a ten-member commission appointed by the leaders of the United States Congress with the goal of investigating the causes of the financial crisis of 2007–2008. The Commission has been nicknamed ...
in 2011, saying "that a number of people he interviewed at the reserve bank believe that supervisors paid excessive deference to banks and, as a result, they were less aggressive in finding issues or in following up on them in a forceful way". In 2012, Carmen Segarra, then an examiner for the Bank, told her superiors that
Goldman Sachs Goldman Sachs () is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered at 200 West Street in Lower Manhattan, with regional headquarters in London, Warsaw, Bangalore, Ho ...
had no policy governing conflicts of interest. She was dismissed in May 2012 and brought a lawsuit for whistle-blower retaliation in October 2013. In April 2014 the U.S. District court in Manhattan dismissed the case, "ruling that Segarra failed to make a legally sufficient claim under the whistle-blower protections of the
Federal Deposit Insurance Act The Federal Deposit Insurance Act of 1950, , is a statute that governs the Federal Deposit Insurance Corporation (FDIC). The FDIC was originally created by the Banking Act of 1933, which amended the Federal Reserve Act The Federal Reserve Act w ...
". In September 2014, Segarra's secretly recorded conversations were aired by ''
This American Life ''This American Life'' (''TAL'') is an American monthly hour-long radio program produced in collaboration with Chicago Public Media and hosted by Ira Glass. It is broadcast on numerous public radio stations in the United States and internati ...
'' and the Bank was accused of political corruption by being a "captured agency", ''i.e.'', subject to
regulatory capture In politics, regulatory capture (also agency capture and client politics) is a form of corruption of authority that occurs when a political entity, policymaker, or regulator is co-opted to serve the commercial, ideological, or political interests ...
, of the banks which it supervises.


Board of directors

The following people serve on the board of directors . Terms expire on December 31 of their final year on the board.


Presidents

File:Benjamin Strong Jr.jpg, 1. Strong (1914–1928) File:George L Harrison.png, 2. Harrison (1928–1940) File:Paulvolcker.jpg, 5. Volcker (1975–1979) File:Timothy Geithner official portrait.jpg, 9. Geithner (2003–2009) File:William C. Dudley.jpg, 10. Dudley (2009–2018) File:John C. Williams (cropped).jpg, 11. Williams (2018–present) *3. Sproul (1941–1956) *4. Hayes (1956–1975) *6. Solomon (1980–1985) *8. McDonough (1993–2003)


In popular culture

In the first '' Godfather'' movie, the "meeting of the Dons" scene uses the Federal Reserve building exterior, even though the interior of another New York building (the Penn Central railway boardroom) was also used for filming. In the 1984 film ''
Once Upon a Time in America ''Once Upon a Time in America'' ( it, C'era una volta in America) is a 1984 epic crime film co-written and directed by Italian filmmaker Sergio Leone and starring Robert De Niro and James Woods. The film is an Italian–American venture produ ...
'' Max suggests a New York Federal Reserve Bank heist, which Noodles and Carol deem a suicide mission. In the 1974 film '' The Taking of Pelham One Two Three'' hijackers take over a subway train car and demand $1 million for release of the car and 19 passengers, and the city must deliver it to the train car within one hour or the hijackers will start killing passengers at the rate of one per minute until it is delivered. The money for the ransom, to be provided in bundles of used $50 and $100 bills, is frantically assembled by workers at the Federal Reserve Bank of New York while a police cruiser waits at the front entrance for it to be assembled for delivery. The Federal Reserve Bank of New York plays a prominent role in the 1995 film '' Die Hard with a Vengeance'', starring Bruce Willis and Jeremy Irons. The Federal Reserve Bank is the setting for a major heist of the gold by Jeremy Irons' character, Simon Gruber. The vault is penetrated under the pretense of construction work and the gold bullion transported via dump trucks to a location outside the city. The New York Fed publishes a series of educational comic books about its activities. Included are such titles as ''Once upon a Dime'', ''The Story of Money'', ''Too Much, Too Little'', ''A Penny Saved ...'', and ''The Story of Foreign Trade and Exchange''. During the final season of the TV series ''
The Strain ''The Strain'' is a 2009 vampire horror novel by Guillermo del Toro and Chuck Hogan. It is the first installment in ''The Strain Trilogy'', and was followed by '' The Fall'' (2010) and ''The Night Eternal'' (2011). Plot synopsis A Boeing 777 ...
'', the protagonists use the abandoned Federal Reserve to hide their stolen nuclear warhead until they can determine how to use it against the Master. While the gold supply is acknowledged, more focus is given to the silver, which is melted down to create weapons to use against the vampires. In the TV series ''
The Endgame ''The Endgame'' is an American crime drama thriller television series that premiered on NBC on February 21, 2022. The series is created by Nicholas Wootton and Jake Coburn. In May 2022, the series was canceled after one season. Premise In thi ...
'', the Federal Reserve is one of the banks targeted by Elena Federova's Snow White criminal organization. However, it is revealed that this apparent robbery is merely a means of exposing the fact that the gold has already been stolen and replaced with painted clay bars by the rival Belok syndicate, with help from the corrupt President Andrew Wright.


See also

* Economy of New York City *
Federal Reserve Act The Federal Reserve Act was passed by the 63rd United States Congress and signed into law by President Woodrow Wilson on December 23, 1913. The law created the Federal Reserve System, the central banking system of the United States. The Pani ...
*
Federal Reserve System The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after ...
*
Federal Reserve Districts A Federal Reserve Bank is a regional bank of the Federal Reserve System, the central banking system of the United States. There are twelve in total, one for each of the twelve Federal Reserve Districts that were created by the Federal Reserve ...
*
Federal Reserve Branches There are 24 Federal Reserve branches. There were 25 branches but in October 2008 the Federal Reserve Bank of New York Buffalo Branch was closed. List of Federal Reserve branches * Boston * New York ** '' Federal Reserve Bank of New York Buffal ...
* Federal Reserve Bank of New York Buffalo Branch *
Official gold reserves A gold reserve is the gold held by a national central bank, intended mainly as a guarantee to redeem promises to pay depositors, note holders (e.g. paper money), or trading peers, during the eras of the gold standard, and also as a store of v ...
*
Structure of the Federal Reserve System The Structure of the Federal Reserve System is unique among all the assets within central banks, with private aspects. It is described as " independent within the government" rather than " independent of government". The Federal Reserve does n ...
* East Rutherford Operations Center (regional office for cash handling and processing of the Federal Reserve Bank of New York)


References

Notes Further reading *Alessi, Lucia, et al. "Central bank macroeconomic forecasting during the global financial crisis: the European Central Bank and Federal Reserve Bank of New York experiences." ''Journal of Business & Economic Statistics'' (2014) 32#4 pp: 483-500. *Chandler, Lester Vernon. ''Benjamin Strong: Central Banker'' (Brookings Institution, 1958) *Clark, Lawrence Edmund. ''Central Banking Under the Federal Reserve System: With Special Consideration of the Federal Reserve Bank of New York'' (Macmillan, 1935) *Greider, William. ''Secrets of the temple: How the Federal Reserve runs the country'' (Simon and Schuster, 1989) *Meltzer, Allan H. ''A History of the Federal Reserve'' (2 vol, University of Chicago Press, 2010)


External links

*
"World's Greatest Treasure Cave"
''Popular Mechanics'', January 1930, pp. 34–38
"How Uncle Sam Guards His Millions", March 1931, Popular Mechanics
article showing the upgrades for gold storage at the New York Federal Reserve Bank
Historical resources by and about the Federal Reserve Bank of New York
including annual reports back to 1915 {{DEFAULTSORT:Federal Reserve Bank Of New York New York Economy of New York City Financial District, Manhattan 1914 establishments in New York City Federal Reserve Bank of New York