Treasury vs Fed

Extracted Attributes

• U.S. Treasury Role

  Prints nation's currency, manages government debt, chief international monetary policy official

• Nature of Relationship

  Independent but coordinating, with historical accords and recent points of tension

• Federal Reserve Structure

  Board of Governors, 12 regional Federal Reserve Banks, Federal Open Market Committee (FOMC)

• Federal Reserve Founding Act

  Federal Reserve Act

• Federal Reserve Independence

  Monetary policy decisions do not require presidential or congressional approval; not funded by congressional appropriations

• Federal Reserve Establishment Date

  1913-12-23

• Federal Reserve Primary Objectives

  Maximizing employment, stabilizing prices, moderating long-term interest rates (Dual Mandate)

• Federal Reserve Key Responsibilities

  Supervising and regulating banks, maintaining financial system stability, providing financial services to depository institutions, U.S. government, and foreign official institutions

• Treasury Secretary (as of March 2025 context)

  Scott Bessent

• Federal Reserve Profit Transfer to Treasury (2015)

  $97.7 billion

• Federal Reserve Profit Transfer to Treasury (2020)

  $86.9 billion

Timeline

• The Federal Reserve System was established by the Federal Reserve Act to alleviate financial crises, particularly after the Panic of 1907. (Source: Wikipedia)

  1913-12-23

• At the request of the Department of the Treasury, the Federal Reserve formally committed to maintaining a low interest-rate peg (3/8 percent on short-term Treasury bills and 2.5 percent on long-term Treasury bonds) to finance World War II. (Source: Web Search Results)

  1942-04

• The Treasury and the Fed issued the "Treasury-Fed Accord," reaching full accord on debt management and monetary policies, which ended the Fed's commitment to pegging interest rates. (Source: Web Search Results)

  1951-03-04

• The Federal Reserve commenced foreign exchange operations at the request of the Treasury, leading to close and continuous consultation between the two entities. (Source: Web Search Results)

  1962

• The Federal Reserve earned a net income of $100.2 billion and transferred $97.7 billion to the U.S. Treasury. (Source: Wikipedia)

  2015

• The Federal Reserve's earnings were approximately $88.6 billion, with remittances of $86.9 billion to the U.S. Treasury. (Source: Wikipedia)

  2020

• Discussions highlighted a disconnect between the Treasury and the Fed, with the Federal Reserve holding rates steady amidst uncertainty caused by planned tariffs and the challenge of refinancing a large amount of short-term debt financing. Treasury Secretary Scott Bessent called for a review of the Fed's 'mandate creep' into non-monetary policy areas. (Source: Related Documents)

  2025-03

Federal Reserve

The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics (particularly the panic of 1907) led to the desire for central control of the monetary system in order to alleviate financial crises. Although an instrument of the U.S. government, the Federal Reserve System considers itself "an independent central bank because its monetary policy decisions do not have to be approved by the president or by anyone else in the executive or legislative branches of government, it does not receive funding appropriated by Congress, and the terms of the members of the board of governors span multiple presidential and congressional terms." Over the years, events such as the Great Depression in the 1930s and the Great Recession during the 2000s have led to the expansion of the roles and responsibilities of the Federal Reserve System. Congress established three key objectives for monetary policy in the Federal Reserve Act: maximizing employment, stabilizing prices, and moderating long-term interest rates. The first two objectives are sometimes referred to as the Federal Reserve's dual mandate. Its duties have expanded over the years, and include supervising and regulating banks, maintaining the stability of the financial system, and providing financial services to depository institutions, the U.S. government, and foreign official institutions. The Fed also conducts research into the economy and provides numerous publications, such as the Beige Book and the FRED database. The Federal Reserve System is composed of several layers. It is governed by the presidentially appointed board of governors or Federal Reserve Board (FRB). Twelve regional Federal Reserve Banks, located in cities throughout the nation, regulate and oversee privately owned commercial banks. Nationally chartered commercial banks are required to hold stock in, and can elect some board members of, the Federal Reserve Bank of their region. The Federal Open Market Committee (FOMC) sets monetary policy by adjusting the target for the federal funds rate, which generally influences market interest rates and, in turn, US economic activity via the monetary transmission mechanism. The FOMC consists of all seven members of the board of governors and the twelve regional Federal Reserve Bank presidents, though only five bank presidents vote at a time: the president of the New York Fed and four others who rotate through one-year voting terms. There are also various advisory councils. It has a structure unique among central banks, and is also unusual in that the United States Department of the Treasury, an entity outside of the central bank, prints the currency used. The federal government sets the salaries of the board's seven governors, and it receives all the system's annual profits after dividends on member banks' capital investments are paid, and an account surplus is maintained. In 2015, the Federal Reserve earned a net income of $100.2 billion and transferred $97.7 billion to the U.S. Treasury, and 2020 earnings were approximately $88.6 billion with remittances to the U.S. Treasury of $86.9 billion. The Federal Reserve has been criticized for its approach to managing inflation, perceived lack of transparency, and its role in economic downturns.

Web Search Results

• The Treasury-Fed Accord - Federal Reserve History

  On March 4, 1951, the Treasury and the Fed issued a statement saying they had "reached full accord with respect to debt management and monetary policies to be pursued in furthering their common purpose and to assure the successful financing of the government's requirements and, at the same time, to minimize monetization of the public debt" (William McChesney Martin, Jr., Collection 1951). [...] In April 1942, at the request of the Department of the Treasury, the Federal Reserve formally committed to maintaining a low interest-rate peg of 3/8 percent on short-term Treasury bills. The Fed also implicitly capped the rate on long-term Treasury bonds at 2.5 percent. The goal of the peg was to stabilize the securities market and allow the federal government to engage in cheaper debt financing of World War II, which the United States had entered in December 1941. [...] Hetzel, Robert L., and Ralph F. Leach. "The Treasury-Federal Reserve Accord: A New Narrative Account," Federal Reserve Bank of Richmond Economic Quarterly 87, no. 1 (Winter 2001): 33-55. Federal Reserve Bank of New York. "Joint Announcement by the Secretary of the Treasury and the Chairman of the Board of Governors, and of the Federal Open Market Committee, of the Federal Reserve System." Circular 3665, March 4, 1951, via Available on FRASER.

• How does the Federal Reserve's buying and selling of securities ...

  The Fed purchases Treasury securities held by the public through a competitive bidding process. The Fed does not purchase new Treasury securities directly from the U.S. Treasury, and purchases of Treasury securities from the public are not a means of financing the federal deficit. [...] The federal government borrows from the public by issuing Treasury securities, which are sold at auction according to a schedule that is published quarterly. The Fed does not participate in competitive bidding at Treasury auctions. ###### Board of Governors of the Federal Reserve System ###### Tools and Information ###### Stay Connected Link to USA.gov Link to Open.gov Board of Governors of the Federal Reserve System 20th Street and Constitution Avenue N.W., Washington, DC 20551 [...] The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system. Federal Open Market Committee Monetary Policy Principles and Practice Policy Implementation Reports Review of Monetary Policy Strategy, Tools, and Communications Institution Supervision Reports Reporting Forms Supervision & Regulation Letters Banking Applications & Legal Developments Regulatory Resources Banking & Data Structure

• Relations with the Federal Reserve | U.S. Department of the Treasury

  The Secretary of the Treasury is the chief international monetary policy official of the United States. The Federal Reserve has separate legal authority to engage in foreign exchange operations. The Federal Reserve's foreign exchange operations are conducted in close and continuous consultation and cooperation with the Secretary to ensure consistency with U.S. international monetary and financial policy. [...] The Treasury and the Fed have closely coordinated their foreign exchange operations since early 1962, when the Federal Reserve commenced such operations at the request of the Treasury. Operations are conducted through the Federal Reserve Bank of New York (FRBNY), as fiscal agent of the United States and as the operating arm of the Federal Reserve System. ### Bureaus ### Inspector General Sites ### U.S. Government Shared Services ### Additional Resources ### Other Government Sites [...] ## Terrorism and Illicit Finance Sanctions Asset Forfeiture Domestic Violent Extremism 311 Actions Terrorist Finance Tracking Program Money Laundering Financial Action Task Force Protecting Charitable Organizations ## Financing the Government Treasury Quarterly Refunding Interest Rate Statistics Treasury Securities Treasury Investor Data Debt Management Research ## Financial Markets, Financial Institutions, and Fiscal Service Cash and Debt Forecasting Debt Limit

• US Treasury's Bessent calls for review of Fed non-monetary policy ...

  WASHINGTON (Reuters) -U.S. Treasury Secretary Scott Bessent said the Federal Reserve's vital independence on monetary policy is threatened by its "mandate creep" into non-policy areas and he called on the U.S. central bank to conduct an exhaustive review of those operations. [...] Oops, something went wrong ### News ### Life ### Entertainment ### Finance ### Sports ### New on Yahoo # Yahoo Finance Reuters # US Treasury's Bessent calls for review of Fed non-monetary policy operations By Andrea Shalal and David Lawder [...] The Fed's autonomy "is threatened by persistent mandate creep into areas beyond its core mission, provoking justifiable criticism that unnecessarily casts a cloud over the Fed's valuable independence on monetary policy," Bessent said in a post on X. He called Fed monetary policy "a jewel box" that should be walled off to preserve its independence, which he called a cornerstone of continued U.S. economic growth and stability.

• The Fed Explained - Who We Are - Federal Reserve Board

  They also play a key role in another primary Fed function—fostering the safety and efficiency of our nation's payment systems, including distributing currency and coins to banks, operating electronic payment systems, and clearing our checks; and acting as the "government's bank" by providing services such as maintaining the Treasury Department's transaction account and issuing and redeeming U.S. government securities [...] They also play a key role in another primary Fed function—fostering the safety and efficiency of our nation's payment systems, including distributing currency and coins to banks, operating electronic payment systems, and clearing our checks; and acting as the "government's bank" by providing services such as maintaining the Treasury Department's transaction account and issuing and redeeming U.S. government securities. [...] The Federal Reserve is the U.S. central bank, created by the Federal Reserve Act of 1913 to establish a monetary system that could respond effectively to stresses in the banking system. The Federal Reserve System includes The Board of Governors, a federal agency located in Washington, D.C., and 12 Federal Reserve Banks around the nation.