ShadowedgeFFXI wrote:
You're so horribly misinformed, I wonder where to begin. It's nice to see that you can quote Wikipedia, but that doesn't really mean ****.
The Fed has two purposes. They are, explicitly:
1. Engage in the purchase and sale of Treasury bonds to control the money supply (monetary policy) with the goal of providing for a stable common currency (low inflation) and low unemployment (but not zero!).
2. Act as the "lender of last resort" for private banking institutions.
They don't supervise, regulate, or otherwise have any control over private banks; you're thinking of the FDIC, which is a body of the US Treasury Department.
The only way in which the Fed indirectly influences private banks, besides lending, is by setting target interest rates, which are generally adopted by private lending institutions for inter-bank loans. These target interest rates are not official in any capacity, but they signal the private market as to the Fed's intentions with regards to the future course of monetary policy, which helps to reduce economic uncertainty and promote long-term investment.