Federal Reserve System ("the Fed") - the regulatory backbone of the nation's banking system. Established in 1913, the Fed consists of a presidentially appointed Board of Governors with a highly visible chairman and 12 Federal Reserve District Banks. The Fed is charged with regulation of the nation's money supply. It uses a variety of financial tools to exert upward or downward pressure on interest rates as the economy expands and contracts. Federal Reserve policy has a direct effect on mortgage interest rates.

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