History of Federal Reserve in Timeline

The Federal Reserve System, established on December 23, 1913, serves as the central banking system of the United States. Created in response to financial panics, its primary goal was to provide central control over the monetary system to mitigate financial crises. The Fed operates as an independent entity within the government, with monetary policy decisions not subject to approval from the executive or legislative branches. It is self-funded and its governors serve terms spanning multiple presidencies and congressional sessions. Events like the Great Depression and the Great Recession led to an expansion of the Federal Reserve's responsibilities.

1907: Bank Panic of 1907

In 1907, a bank panic occurred, highlighting the weaknesses of the existing national banking system and leading to calls for monetary reform.

1907: Severe Financial Crisis in 1907

In 1907, a severe financial crisis occurred in the United States, which led Congress to enact the Federal Reserve Act in 1913.

1908: Enactment of the Aldrich–Vreeland Act

In 1908, Congress enacted the Aldrich–Vreeland Act, providing for an emergency currency and establishing the National Monetary Commission to study banking and currency reform in response to the Panic of 1907.

November 1910: Aldrich met with bankers to devise central banking bill

In November 1910, Nelson Aldrich met with members of the New York banking community to create a central banking bill, later called the "Aldrich Plan." The plan included a central bank headquartered in Washington with fifteen branches, and a uniform currency based on gold and commercial paper.

1912: Democrats win White House and Congress

In 1912, the original Aldrich Plan faced a setback when Democrats won the White House and Congress. However, President Woodrow Wilson used the Aldrich plan with modifications as the basis for the Federal Reserve Act.

May 1913: Federal Reserve Act Proposed

In May 1913, Senator Robert Owen proposed the Federal Reserve Act, building upon the Aldrich Plan with the key difference of transferring control of the board of directors to the government.

December 22, 1913: House voted on Federal Reserve Act

On December 22, 1913, the House voted on the Federal Reserve Act, with 298 voting in favor and 60 voting against.

December 23, 1913: Enactment of the Federal Reserve Act

On December 23, 1913, the Federal Reserve System was created with the enactment of the Federal Reserve Act, following a series of financial panics, most notably the panic of 1907. This act aimed to establish central control over the monetary system to mitigate financial crises.

1913: Congressional Adoption of Federal Reserve Legislation

In 1913, Congress adopted legislation creating the Federal Reserve System, reflecting a compromise between agrarian interests favoring public control and bankers concerned about government intervention.

1913: Enactment of the Federal Reserve Act

In 1913, Congress enacted the Federal Reserve Act, primarily to address banking panics. The act also aimed to furnish an elastic currency, provide means of rediscounting commercial paper, and establish more effective banking supervision.

1913: Federal Reserve Act Passed by Congress

In 1913, Congress passed the Federal Reserve Act, which established the Federal Reserve System and is subject to Congressional modification or repeal.

1913: Establishment of the Federal Advisory Council (FAC)

In 1913, the Federal Advisory Council (FAC) was established under the Federal Reserve Act to provide the Board of Governors with insights and recommendations from the banking industry and regional economic perspectives.

1913: End of the System of National Banks

In 1913, the system of national banks came to an end. This system had been instituted by the 1863 National Banking Act and saw a series of bank panics.

1913: Criticisms of the Federal Reserve System began

Since its inception in 1913, the Federal Reserve System has faced criticism regarding its monetary policy, lack of transparency, and potential role in exacerbating financial instability. Concerns include inflation, asset bubbles, and serving the interests of large financial institutions.

1913: Federal Reserve Authority to Set Monetary Policy

The Federal Reserve Act of 1913 granted the Federal Reserve the authority to set monetary policy in the United States.

1921: End of Independent Treasury System

In 1921, the Independent Treasury System ended its reign. This system had been in place since 1846.

1929: Bank Runs of 1929

During the bank runs of 1929, the Federal Reserve's perceived refusal to lend money to small banks, as argued by Milton Friedman, contributed to the Great Depression.

1935: The Banking Act of 1935 created the modern structure of the Federal Reserve

In 1935, The Banking Act of 1935 established the current structure of the Federal Reserve, safeguarding its independence by removing monetary decisions from presidential oversight.

1971: Departure from the gold standard

In 1971, the Federal Reserve's departure from the gold standard led to criticisms, with many arguing it contributed to long-term inflationary pressures and devaluation of the U.S. dollar.

1978: Enactment of the Federal Banking Agency Audit Act

In 1978, the Federal Banking Agency Audit Act was enacted as Public Law 95-320 and 31 U.S.C. section 714, establishing that the Government Accountability Office (GAO) may audit the board of governors of the Federal Reserve System and the Federal Reserve banks with some restrictions.

1980: Depository Institutions Deregulation and Monetary Control Act of 1980

In 1980, Congress reaffirmed the Federal Reserve's role in promoting an efficient nationwide payments system through the Depository Institutions Deregulation and Monetary Control Act. This act subjected all depository institutions to reserve requirements and granted them equal access to Reserve Bank payment services.

March 2006: Federal Reserve stopped publishing M3 statistics

In March 2006, the Federal Reserve discontinued publishing M3 statistics, citing high data collection costs and limited usefulness.

2006: Donald L. Kohn's Summary of the Public/Private Compromise

In 2006, Donald L. Kohn, vice chairman of the board of governors, summarized the history of the compromise between privatization and government regulation in the design of the Federal Reserve System.

December 12, 2007: Term Auction Facility Added

On December 12, 2007, the Federal Reserve introduced the Term Auction Facility (TAF) as a temporary tool to address problems related to the subprime mortgage crisis and the United States housing bubble.

2007: Commercial Paper Market Shrinkage

Since the summer of 2007, the commercial paper market had shrunk from more than $2.2 trillion.

March 11, 2008: Term Securities Lending Facility Announced

On March 11, 2008, the creation of the Term Securities Lending Facility (TSLF) was announced. This new tool was designed to inject treasury securities into the banking system.

March 16, 2008: Primary Dealer Credit Facility (PDCF) Announced

On March 16, 2008, the creation of the Primary Dealer Credit Facility (PDCF) was announced. This facility allowed the Fed to lend directly to primary dealers, a change from previous policy.

September 16, 2008: Federal Reserve Loan to AIG

On September 16, 2008, the Federal Reserve Board authorized an $85 billion loan to prevent the bankruptcy of American International Group (AIG).

September 22, 2008: ABCPMMMFLF Operations Began

On September 22, 2008, the Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (ABCPMMMFLF), also known as the AMLF, began operations. This facility allowed various U.S. financial institutions to borrow funds.

October 7, 2008: Federal Reserve Expanded Collateral to Include Commercial Paper

On October 7, 2008, the Federal Reserve expanded the collateral it would loan against to include commercial paper through the Commercial Paper Funding Facility (CPFF), making the Fed a crucial credit source for non-financial businesses.

October 2008: Commercial Paper Market Size

In October 2008, outstanding commercial paper was at $1.61 trillion. It had shrunk from over $2.2 trillion since the summer of 2007.

November 7, 2008: Bloomberg L.P. Lawsuit Against the Federal Reserve

On November 7, 2008, Bloomberg L.P. filed a lawsuit against the board of governors of the Federal Reserve System to compel the disclosure of firms receiving guarantees during the 2008 financial crisis.

November 2008: Fed Buys Mortgage-Backed Securities for the First Time

In November 2008, in response to the bursting of the United States housing bubble, the Federal Reserve began buying mortgage-backed securities for the first time. Over a period of six weeks, $1.25 trillion was purchased to stabilize the housing market.

November 25, 2008: Announcement of Term Asset-Backed Securities Loan Facility (TALF)

On November 25, 2008, the Term Asset-Backed Securities Loan Facility (TALF) was announced by the Federal Reserve and the U.S. Treasury to stimulate consumer and business lending.

2008: Federal Reserve Started Paying Interest on Reserves

As a response to the 2008 financial crisis, the Federal Reserve started making interest payments on depository institutions' required and excess reserve balances, providing more flexibility in addressing credit market conditions.

2008: Financial crisis

Following the 2008 financial crisis, the Federal Reserve began purchasing U.S. Treasury bonds and mortgage-backed securities as part of quantitative easing.

2008: Shift to Ample Reserves Regime

In 2008, following the financial crisis, the Federal Reserve moved from a limited reserves regime, where open market operations were used to adjust reserve supply, to an ample reserves regime. Under this new regime, the Fed started using administered rates, particularly the IORB rate, to influence the FFR, while still using open market operations to maintain ample reserves.

2008: Federal Reserve Measures During the 2008 Financial Crisis

In 2008, the Federal Reserve implemented several measures to address the financial crisis, some of which had not been used since the Great Depression.

2008: Establishment of the Primary Dealer Credit Facility

In 2008, the Primary Dealer Credit Facility (PDCF) was established to provide overnight loans to primary dealers in exchange for eligible collateral, fostering the functioning of financial markets.

2008: CPFF Modeled After 2008 Crisis-Era Facility

The Commercial Paper Funding Facility (CPFF), reintroduced in March 2020, was modeled after the 2008 crisis-era facility to stabilize the commercial paper market.

2008: Federal Reserve's Handling of the 2008 financial crisis

The Federal Reserve's handling of the 2008 financial crisis, specifically bailing out large banks and financial institutions, drew criticism for creating moral hazard and worsening the economic collapse.

March 2009: Launch of the Term Asset-Backed Securities Loan Facility (TALF)

In March 2009, the Term Asset-Backed Securities Loan Facility (TALF) was launched by the Federal Reserve and the U.S. Treasury to stimulate consumer and business lending.

December 9, 2009: Term Deposit Facility Program Announced

On December 9, 2009, the Term Deposit Facility program was announced. This program, designed to help manage the aggregate quantity of reserve balances held by depository institutions, involves the Federal Reserve Banks offering interest-bearing term deposits to eligible institutions.

February 1, 2010: Term Securities Lending Facility Closed

On February 1, 2010, the Term Securities Lending Facility (TSLF) was closed. This facility, which offered Treasury general collateral to primary dealers, was intended to promote liquidity in financing markets.

March 8, 2010: Final Term Auction Facility Auction

On March 8, 2010, the final Term Auction Facility auction was carried out. This facility was created to address elevated pressures in short-term funding markets during the financial crisis.

April 30, 2010: Term Deposit Facility Program Approved

On April 30, 2010, the Term Deposit Facility was approved, marking a significant step in the Federal Reserve's monetary policy implementation.

June 4, 2010: Term Deposit Facility Effective Date

On June 4, 2010, the Term Deposit Facility became effective. The implementation of this program allowed the Federal Reserve to manage reserve balances by offering interest-bearing term deposits to depository institutions.

June 2010: TALF Ceased Issuing New Loans

In June 2010, the Term Asset-Backed Securities Loan Facility (TALF) ceased issuing new loans, marking a step towards winding down the crisis-era program.

March 31, 2011: Release of Data from the Federal Reserve

On March 31, 2011, data regarding firms receiving guarantees during the 2008 financial crisis was released after Bloomberg, L.P. won its lawsuit against the Federal Reserve and subsequent appeals were rejected.

August 2012: Federal Reserve Board Publishes Unaudited Financial Reports

As of August 2012, the Federal Reserve Board has been publishing unaudited financial reports for the Federal Reserve banks every quarter.

2012: Net worth of households and nonprofits reported

In 2012, the Federal Reserve's Flow of Funds report showed the net worth of U.S. households and nonprofit organizations was $64.8 trillion at the end of the third quarter.

2014: Net worth of households and nonprofits reported

In 2014, the Federal Reserve's Flow of Funds report showed the net worth of U.S. households and nonprofit organizations was $95.5 trillion at the end of the first quarter.

2015: Term Asset-Backed Securities Loan Facility (TALF) Fully Winding Down

By 2015, the Term Asset-Backed Securities Loan Facility (TALF) was fully wound down, completing its role in providing liquidity during the 2008 financial crisis.

2015: Federal Reserve Banks' Profit Distribution in 2015

In 2015, the Federal Reserve Banks made a profit of $100.2 billion, distributing $2.5 billion in dividends to member banks and returning $97.7 billion to the U.S. Treasury.

2015: Federal Reserve Net Income and Transfer to U.S. Treasury

In 2015, the Federal Reserve's net income was $100.2 billion, and $97.7 billion was transferred to the U.S. Treasury.

March 2020: Reintroduction of PDCF

In March 2020, a new Primary Dealer Credit Facility (PDCF) was introduced in response to COVID-19-related market disruptions, providing funding to primary dealers in exchange for collateral.

March 2020: Reserve Ratio Set to Zero

In March 2020, the Federal Reserve set the reserve ratio to zero for all banks. This action meant that no bank was required to hold any reserves, effectively ceasing the reserve requirement's existence, although the legal framework for reinstatement remains.

March 17, 2020: Reintroduction of Commercial Paper Funding Facility (CPFF)

On March 17, 2020, the Federal Reserve reintroduced the Commercial Paper Funding Facility (CPFF) to support credit flow to households and businesses by purchasing eligible commercial paper, modeled after the 2008 crisis-era facility.

2020: Bureau of Engraving and Printing Note Deliveries

During the Fiscal Year 2020, the Bureau of Engraving and Printing delivered 57.95 billion notes at an average cost of 7.4 cents per note.

2020: Federal Reserve Earnings and Remittances to U.S. Treasury

In 2020, the Federal Reserve's earnings were approximately $88.6 billion, with remittances to the U.S. Treasury totaling $86.9 billion.

March 31, 2021: CPFF Ceased Operations

On March 31, 2021, the Commercial Paper Funding Facility (CPFF) ceased operations, concluding its support for the commercial paper market.

April 2021: Federal Reserve balance sheet released

In April 2021, the Federal Reserve released its balance sheet, which is updated every Thursday, detailing its assets and liabilities.

2021: Federal Reserve Explained Monetary Policy Implementation

In 2021, the Federal Reserve provided an explanation of how it implements monetary policy, focusing on influencing the federal funds rate through various tools.

2021: PDCF Ceased Extending Credit

In 2021, the Primary Dealer Credit Facility (PDCF) that was reintroduced in March 2020, ceased extending credit.

March 2022: Interest rates near zero until March 2022

The Federal Reserve's policies during the COVID-19 pandemic, including quantitative easing (QE) and keeping interest rates near zero until March 2022, were criticized for contributing to a significant inflation spike.

2022: Diane Swonk compares inflation to cancer

In 2022, Diane C. Swonk, chief economist and advisor to the Federal Reserve, likened inflation to cancer, emphasizing the need for proactive measures to prevent it from becoming chronic.

2022: Fed started quantitative tightening

In 2022, the Federal Reserve initiated quantitative tightening (QT), selling assets and incurring losses in the secondary bond market, which led to the discontinuation of nearly $100 billion in annual remittances to the Treasury.

2023: Planned Launch of FedNow Service

Beginning in 2023, the Federal Reserve Banks will facilitate instant payments using the FedNow service, as part of their role in the nation's retail and wholesale payments systems.

2023: Federal Reserve reports net negative income

In 2023, the Federal Reserve reported a net negative income of $114.3 billion, resulting in a deferred asset liability of $133.3 billion booked as "Interest on Federal Reserve notes due to U.S. Treasury."

August 2024: Fed's total assets on balance sheet at $7.139 trillion

As of August 2024, the Fed's total assets on its balance sheet amounted to $7.139 trillion.

2024: Net worth of households and nonprofits reached $172.7 trillion

In 2024, as of the fourth quarter, the net worth of households and nonprofit organizations reached $172.7 trillion, boosted by gains in corporate equity and real estate values.

April 2025: CPFF Status as of April 2025

As of April 2025, the Commercial Paper Funding Facility (CPFF) is not in place, indicating the end of its role in supporting the commercial paper market.

2027: Federal Reserve estimated deferred asset will last until mid-2027

In 2023, the Federal Reserve estimated the deferred asset, resulting from a net negative income of $114.3 billion, will last until mid-2027, before remittances can continue.

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