The Federal Reserve was created in 1913 by the Federal Reserve Act to serve as the nation's central bank. The Board of Governors in Washington, D.C., is an agency of the federal government and reports to and is directly accountable to the Congress.
The Federal Reserve derives its authority from the Congress, which created the System in 1913 with the enactment of the Federal Reserve Act. This central banking "system" has three important features: (1) a central governing board—the Federal Reserve Board of Governors; (2) a decentralized operating structure of 12 Federal Reserve Banks; and (3) a blend of public and private characteristics.
The Board—appointed by the President and confirmed by the Senate—provides general guidance for the Federal Reserve System and oversees the 12 Reserve Banks. The Board reports to and is directly accountable to the Congress but, unlike many other public agencies, it is not funded by congressional appropriations. The Chair and other staff testify before Congress, and the Board submits an extensive report—the Monetary Policy Report—on recent economic developments and its plans for monetary policy twice a year. The Board also makes public the System's independently audited financial statements, along with minutes from the FOMC meetings.
In addition, though the Congress sets the goals for monetary policy, decisions of the Board—and the Fed's monetary policy-setting body, the Federal Open Market Committee—about how to reach those goals do not require approval by the President or anyone else in the executive or legislative branches of government.
Board of Governors of the Federal Reserve System. (2017, March 1). https://www.federalreserve.gov/faqs/about_14986.htm.
FedReserveBoard. (2016, October 13). What is the Fed? YouTube. https://www.youtube.com/watch?v=wLyh5fSTLLw.
FedReserveBoard. (2018, January 18). Fed Functions: Conducting Monetary Policy. YouTube. https://www.youtube.com/watch?v=xHQJBNO0yQc.