All Federal Reserve Banks, District and Branch, provide banking services to commercial banks, regulate commercial banking activity, process checks and other payments, provide banking services for government agencies, collect and analyze economic data, and undertake a host of other activities.

Federal Reserve Pyramid

The exhibit to the right, commonly termed the Federal Reserve pyramid, indicates the connection between Federal Reserve Banks and the rest of the Federal Reserve System. The 37 Federal Reserve Banks (12 District Banks and 25 Branch Banks) form the middle of the pyramid, essentially functioning as the go-between the Board of Governors and commercial banks. The Fed Banks are largely responsible for supervising, regulating, and interacting with commercial banks and carrying out the policies established by the Federal Reserve Board of Governors.

Districts and Branches

The 25 Federal Reserve Branch Banks exist to assist their parent District Banks in their assigned duties. Should a commercial bank need Federal Reserve services, it can contact its nearby Branch Bank rather than a more distant District Bank. Branch Banks generally do not provide the entire range of services of District Banks (much like the branch of a commercial bank provides scaled down services) and they are subservient to their District Banks.

Ten of the Federal Reserve Districts contain Branch Banks. Only the Boston and Philadelphia districts have no Branch Banks. Branch Banks tend to be more numerous in the less densely populated, larger Federal Reserve Districts in the west and South.

Cities containing the 25 Branch Banks, grouped according to their District Bank cities are: Boston (no Branch Banks); New York (Buffalo); Philadelphia (no Branch Banks); Cleveland (Cincinnati, Pittsburgh); Richmond (Baltimore, Charlotte); Atlanta (Birmingham, Jacksonville, Miami, Nashville, New Orleans); Chicago (Detroit); St. Louis (Little Rock, Louisville, Memphis); Minneapolis (Helena); Kansas City (Denver, Oklahoma City, Omaha); Dallas (El Paso, Houston, San Antonio); and San Francisco (Los Angeles, Portland, Salt Lake City).

Administrative Structure

Functions

• First, as the bankers' bank, Federal Reserve Banks provide important banking services to commercial banks. Fed Banks process checks and other electronic payments, distribute paper currency and metal coins, maintain deposits for commercial banks, and extend reserve loans to commercial banks. While private companies also provide payment processing services, the vast majority of check and electronic payments for the economy are handled by the network of 37 Fed Banks.


• Second, Federal Reserve Banks provide regulatory oversight of commercial banks. They track the assets, liabilities, loans, deposits, and reserves of commercial banks to ensure that Federal Reserve regulations are followed. Fed Banks are responsible for inspecting the books of member banks through onsite, field examinations.


• Third, Federal Reserve Banks act as the fiscal agent for the U.S. Treasury and other government agencies. They maintain checking accounts which government agencies use to pay their bills. Fed Banks also handle the sale of U.S. Treasury securities and savings bonds for the Treasury Department. Commercial banks, institutional investors, brokers, dealers, even the general public can purchase newly issued Treasury securities through their nearby Federal Reserve Bank.