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federal - 19 reference results
federal government or federation, government of a union of states in which sovereignty is divided between a central authority and component state authorities. A federation differs from a confederation in that the central power acts directly upon individuals as well as upon states, thus creating the problem of dual allegiance. Substantial power over matters affecting the people as a whole, such as external affairs, commerce, coinage, and the maintenance of military forces, are usually granted to the central government. Nevertheless, retention of jurisdiction over local affairs by states is compatible with the federal system and makes allowance for local feelings. The chief political problem of a federal system of government is likely to be the allocation of sovereignty, because the need for unity among the federating states may conflict with their desire for autonomy. The Greek city-states failed to solve this problem, although religious and political federations were often attempted and the Aetolian and Achaean leagues had many of the institutions of federal government. The primacy of the central over the state governments was not resolved in the United States until after the Civil War. The distribution of powers between the federal and state governments is usually accomplished by means of a written constitution, for a federation does not exist if authority can be allocated by ordinary legislation. A fairly uniform legal system, as well as cultural and geographic affinities, is usually necessary for the success of a federation. Varieties of federation include the Swiss, where the federative principle is carried into the executive branch of government; the Australian, which closely reflects American states' rights and judicial doctrines; and the Canadian, which reverses common federative practice and allots residuary rights to the dominion government. Other examples of federal governments are the German Empire of 1871 and the present state of Germany, modern Russia, Mexico, South Africa, and India.

See J. Bryce, The American Commonwealth (rev. ed. 1959); K. Wheare, Federal Government (4th ed. 1964); D. J. Elazar, American Federalism (2d ed. 1972); W. H. Stewart, Concepts of Federalism (1984); H. Bakvis and W. M. Chandler, ed., Federalism and the Role of the State (1987); K. L. Hall, Federalism (1987).

Federal Writers' Project: see Work Projects Administration.
Federal Trade Commission (FTC), independent agency of the U.S. government established in 1915 and charged with keeping American business competition free and fair. The FTC has no jurisdiction over banks and common carriers, which are under the supervision of other governmental agencies. It has five members, not more than three of whom may be members of the same political party, appointed by the President, with the consent of the Senate, for seven-year terms. The act was part of the program of President Wilson to check the growth of monopoly and preserve competition as an effective regulator of business.

Duties of the FTC

The duties of the FTC are, in general, to promote fair competition through the enforcement of certain antitrust laws; to prevent the dissemination of false and deceptive advertising of goods, drugs, curative devices, and cosmetics; and to investigate the workings of business and keep Congress and the public informed of the efficiency of such antitrust legislation as exists, as well as of practices and situations that may call for further legislation.

Enforcement

The commission's law-enforcement activities have to do with the prevention of unfair methods of competition and false advertising (in accordance with the Federal Trade Commission Act of 1914 and the Wheeler-Lea Act of 1938); with administration of provisions restricting tying and exclusive dealing contracts, acquisition of capital stock, interlocking directorates, and price discriminations (in accordance with the Clayton Antitrust Act of 1914 and the Robinson-Patman Act of 1936); and with administration of the Webb-Pomerene Act of 1918, which permits associations to engage in export trade without incurring the penalties of the Sherman Antitrust Act. In 1946 the FTC was given the right to cancel faulty trademarks. The FTC also enforces the provisions of the Truth in Lending Act of 1968 over creditors (e.g., finance companies, retailers, and nonfederal credit unions) not specifically regulated by another government agency. The act was designed to ensure that a potential borrower can obtain meaningful information about the actual cost of consumer credit.

To enforce antitrust legislation, the commission is empowered to issue cease-and-desist orders upon ascertaining to its satisfaction that the laws are being violated. These orders, to be effective, usually must have court sanction, and the commission must, therefore, in various instances prove its case in court. In deciding such cases the courts have interpreted and applied the phrase "unfair methods of competition." Many of the judicial decisions have frustrated the work of the commission in restricting the growth of monopoly and also, to some degree, the intent of the antitrust laws. Yet the commission has done much toward ridding the business world of vicious competitive practices.

The commission may undertake special investigations at the order of Congress, the President, or upon its own initiative. In its investigatory work, the commission was delegated the power to require information from any corporation in interstate commerce. Many companies, however, gave only partial access to their records, and others gave none. A decision by the Supreme Court declared that access to records of private business, except where substantial proof is submitted as to a specific breach of the law, is a violation of the Fourth Amendment. Despite the fact that the commission's investigatory power was thus greatly limited, it has made and published a notable series of investigations. After the checks rendered by the courts, the commission tended more and more to carry out its recommendations through trade-practice conferences, at which representatives of an industry might voluntarily adopt regulations to control competition in that industry.

Federal Theatre (1935-39), branch of the Work Projects Administration designed to provide employment for actors, directors, writers, and scene designers. As well as providing a nationwide audience with inexpensive, high-quality productions, it gave impetus to experimental theaters, such as the Group Theatre, the Mercury Theatre of Orson Welles, the topical "Living Newspaper" (dramatizations of news stories), and the music-dramas of Marc Blitzstein.

See study by J. D. Mathews (1967, repr. 1971).

Federal Reserve System, central banking system of the United States. Established in 1913, it began to operate in Nov., 1914. Its setup, although somewhat altered since its establishment, particularly by the Banking Act of 1935, has remained substantially the same.

Structure

The Federal Reserve Act created 12 regional Federal Reserve banks, supervised by a Federal Reserve Board. Each reserve bank is the central bank for its district. The boundary lines of the districts were drawn in accordance with broad geographic patterns of business, and the banks were placed in Boston, New York City, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. In addition some of the regional banks have one or more branch banks attached to them.

All national banks must belong to the system, and state banks may if they meet certain requirements. Member banks hold the bulk of the deposits of all commercial banks in the country. Each member bank is required to own stock in the Federal Reserve bank of its district and must maintain legal reserves on deposit with the district reserve bank. The required reserves are proportionate to the member bank's own deposits, the proportion varying according to the location of the member bank and the character of its deposits.

Each reserve bank is managed by a board of nine directors (three appointed by the Federal Reserve Board, six by the local member banks). The Federal Reserve System's Board of Governors designates one of the federally appointed directors as chairman and Federal Reserve agent; it is the chairman's duty to report to the Board. The board of directors appoints the bank's president and other officers and employees. The operations of the Federal Reserve banks, although not conducted primarily for profit, yield an income that is ordinarily sufficient to cover expenses, to pay a 6% cumulative dividend annually on the stock held by member banks, to make additions to surplus, and to provide the U.S. Treasury with over $1 billion a year in revenue.

The Board of Governors of the Federal Reserve System—the national supervisory agency—is composed of seven members appointed for 14-year terms by the President. A chairman and vice chairman, who serve four-year terms in those posts, are named by the President from among the seven members. The board's offices are in Washington, D.C. The Federal Open Market Committee, created later (1923) than the system's other divisions, comprises the seven members of the Board of Governors and five representatives of the Federal Reserve banks; it directs the purchases and sales by the reserve banks of federal government securities and other obligations in the open market. The Federal Advisory Council consists of 12 members, one appointed annually by the board of directors of each reserve bank; it confers from time to time with the Board of Governors on general business conditions and makes recommendations with respect to Federal Reserve affairs. In 1976, the Consumer Advisory Council was created; consisting of both consumer and creditor representatives, it advises the Board of Governors on consumer-related matters.

Function

The most important duties of the Federal Reserve authorities relate primarily to the maintenance of monetary and credit conditions favorable to sound business activity in all fields—agricultural, industrial, and commercial. Among those duties are lending to member banks, open-market operations, fixing reserve requirements, establishing discount rates, and issuing regulations concerning those and other functions. In a sense, each Federal Reserve bank is best understood as a bankers' bank. Member banks use their reserve accounts with the reserve banks in much the same way that a bank depositor uses his checking account. They may deposit in the reserve accounts the checks on other banks and surplus currency received from their customers, and they may draw on the reserve for various purposes, especially to obtain currency and to pay checks drawn upon them (see clearing).

More importantly, the required reserves also enable the Federal Reserve authorities to influence the lending activities of banks. So long as a bank has reserves in excess of requirements, it can enlarge its extensions of credit; otherwise it cannot increase its extensions of credit and may be impelled to borrow additional funds. Inasmuch as the Federal Reserve authorities have power to increase or decrease the supply of excess funds, they are able to exercise considerable influence over the amount of credit that banks may extend. By controlling the credit market, the Federal Reserve System exerts a powerful influence on the nation's economic life. Federal Reserve activities designed to expand bank credit may lead to an upswing in the business cycle, which tends to lead toward inflation; conversely, a restriction of credit generally results in decreased business growth and deflation.

The principal means through which the Federal Reserve authorities influence bank reserves are open-market operations, discounts, and control over reserve requirements. Open-market purchases of securities by Federal Reserve authorities supply banks with additional reserve funds, and sales of securities diminish such funds. Through the power to discount and make advances, the Federal Reserve authorities are able to supply individual banks with additional reserve funds. They may make the funds more or less expensive for member banks by raising or lowering the discount rate. Discounts usually expand only when member banks need to borrow. Raising or lowering requirements—within the limits imposed by law on the Board of Governors—concerning the reserves that member banks maintain on deposit with the reserve banks has the effect of diminishing or enlarging the volume of funds that member banks have available for lending. Such powers directly affect the volume of member bank funds but have no immediate effect in the use of those funds.

In the field of stock market speculation the Federal Reserve authorities have a direct means of control over the use of funds, namely, through the establishment of margin requirements. Another of the important functions of the Federal Reserve System is furnishing Federal Reserve notes (now the chief element in the nation's currency) for circulation. Most economists and bankers agree that the Federal Reserve System has achieved marked improvements in American monetary and banking institutions.

Bibliography

See U.S. Board of Governors of the Federal Reserve System, The Federal Reserve System (5th ed. 1963); D. S. Ahearn, The Federal Reserve Policy Reappraised 1951-1959 (1963); S. W. Adams, The Federal Reserve System (1979); W. J. Davis, The Federal Reserve System (1982).

Federal National Mortgage Association (FMNA), commonly known as Fannie Mae, a privately owned and operated corporation that is the largest purchaser and guarantor of home mortgages in the country. Headquartered in Washington, D.C., Fannie Mae buys mortgages from such lenders as banks and savings and loans, packages them, and resells them on the open market, thus creating fluidity and lessening lenders' risk. Fannie Mae's creation of this secondary mortgage market enables low- and middle-income individuals and families to obtain mortgages and purchase homes. The corporation was founded (1938) by the federal government to buy and sell mortgages insured by the Federal Housing Administration or guaranteed by the Veterans Administration (now the Veterans Affairs Dept.). Rechartered in 1954, it was privatized in 1968. That year also marked the establishment of a federally owned sister corporation, the Government National Mortgage Association (GNMA), or Ginnie Mae, which is administered by the Dept. of Housing and Urban Development and helps to finance public housing. Fannie Mae's corporate credibility was damaged by revelations (2004) that it manipulated its earnings from 1998 to 2004, in part to maximize bonus payments to its corporate executives.
Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, privately owned, government-sponsored organization that uses private capital to buy home mortgages as a means to help lower housing costs. A sister institution to the Federal National Mortgage Association, as well as a sometime competitor, Freddie Mac aims to foster liquidity, stability, and affordability in the U.S. mortgage market to give Americans the opportunity to afford housing. Chartered by Congress in 1970, it purchases mortgages from a variety of lenders and issues numerous publicly offered securities backed by those mortgages; it also retains some securities in its portfolio. One of the country's biggest buyers of home mortgages, by the early years of the 21st cent. Freddie Mac had provided help to over 46 million families, or approximately one in every six American homes. However, disclosures in 2003 that Freddie Mac had misstated its earnings for 2000-2002 damaged its credibility. The corporation has its headquarters in McLean, Va.
Federal Hall National Memorial: see National Parks and Monuments (table).
Federal Deposit Insurance Corporation (FDIC), an independent U.S. federal executive agency designed to promote public confidence in banks and to provide insurance coverage for bank deposits up to $100,000. The corporation was established in 1933 to prevent a repetition of the losses incurred during the Great Depression when bankrupt banks could not return the money deposited in them. It is managed by a five-member board of directors, appointed by the president with the consent of the U.S. Senate. The FDIC provides coverage for deposits in national banks, in state banks that are members of the Federal Reserve System, and in other qualified state banks. (Mutual funds and other securities are not covered.) It may also make loans to insured banks in the interest of protecting the depositors. The corporation derives its income from assessments on insured banks and interest on government securities. Since 1989 the FDIC has supervised the Savings Association Insurance Fund, the agency that was created to provide coverage for savings and loan associations when the Federal Savings and Loan Insurance Corporation became insolvent. A sharp increase in bank failures in the late 1980s and early 1990s led to the insolvency (1991-92) of the FDIC as well, forcing it to seek government loans. The fund recovered by the mid-1990s.
Federal Constitutional Convention: see Constitutional Convention.
Federal Communications Commission (FCC), independent executive agency of the U.S. government established in 1934 to regulate interstate and foreign communications in the public interest. The FCC is composed of five members, not more than four of whom may be members of the same political party, appointed by the president with the consent of the U.S. Senate. The commissioners are authorized to classify television and radio stations, to assign broadcasting frequencies, and to prescribe the nature of their service. The FCC has jurisdiction over standard, high-frequency, relay, international, television, and facsimile broadcasting stations and also has authority over experimental, amateur, coastal, aviation, strip, and emergency radio services; telegraph and interstate telephone companies; cellular telephone and paging systems; satellite facilities; and cable companies. The commission is empowered to grant, revoke, renew, and modify broadcasting licenses. It superintended the relations between AT&T and its successor phone companies and later promoted competition between long-distance phone companies. In the 1990s the FCC was involved in battles over the regulation of both pricing and content in the cable television industry. With the rapid development of telecommunications technologies, particularly mobile communications systems, and the blurring of distinctions between cable television and local and long-distance telephone companies, the job of the FCC continues to become more complex.
Federal Capital Territory: see Australian Capital Territory.
Federal Bureau of Investigation (FBI), division of the U.S. Dept. of Justice charged with investigating all violations of federal laws except those assigned to some other federal agency. The FBI has jurisdiction over some 185 investigative matters, among them espionage, sabotage, and other subversive activities; kidnapping; extortion; bank robbery; interstate transportation of stolen property; civil-rights matters; interstate gambling violations; and fraud against the government. Created (1908) as the Bureau of Investigation, it originally conducted investigations only for the Justice Dept. After J. Edgar Hoover became (1924) director of the Bureau of Investigation, Congress gradually added one duty after another to the jurisdiction of the bureau and reorganized (1933) it with wider powers as the Division of Investigation in the Dept. of Justice. Under Hoover's direction, it battled against such roving outlaws as John Dillinger and "Pretty Boy" Floyd as well as against the organized crime of the prohibition era. In 1935 it was designated the Federal Bureau of Investigation. The FBI played an important role in raising the standards of local police units through its FBI Academy.

During Hoover's final years as director (he served until his death in 1972), the bureau became highly controversial and was the frequent target of attack from a wide variety of liberal groups. During the Watergate affair it was revealed that the FBI had yielded to pressure from top White House officials, acting on behalf of President Richard M. Nixon, to halt their investigation of the Watergate break-in. The FBI subsequently cooperated with the White House "inquiry" into the break-in, which was actually attempting a cover-up, and FBI Acting Director L. Patrick Gray destroyed files belonging to one of the convicted Watergate conspirators, E. Howard Hunt. Gray resigned (Apr., 1973) after his role became public. In June, 1973, Clarence M. Kelley was named director. He was followed by William H. Webster (1978-87), William S. Sessions (1987-93), Louis J. Freeh (1993-2001), and Robert S. Mueller 3d (2001-).

See H. A. Overstreet, The FBI in Our Open Society (1969); W. W. Turner, Hoover's FBI (1970); R. O. Wright, ed., Whose FBI? (1974); J. T. Elliff, The Reform of the FBI Intelligence Activities (1979); F. M. Sorrentino, Ideological Warfare: The F.B.I.'s Path toward Power (1985); B. Burrough, Public Enemies: America's Greatest Crime Wave and the Birth of the FBI: 1933-34 (2004).

Federal Aviation Administration (FAA), component of the U.S. Department of Transportation that sets standards for the air-worthiness of all civilian aircraft, inspects and licenses them, and regulates civilian and military air traffic through its air traffic control centers. It investigates air accidents and in response may establish new rules, for example, on de-icing and air-frame inspections. It also promotes the development of a national system of airports. Established as a federal agency in 1958 to regulate air commerce, it combined the Civil Aeronautics Administration and the Airways Modernization Board. The agency became part of the newly formed Transportation Dept. in 1967.
Federal Art Project: see Work Projects Administration.

U.S. central bank system consisting of 12 Federal Reserve districts with a Reserve bank in the principal commercial city of each district. The system is supervised by a board of governors in Washington, D.C., as well as by various advisory councils and committees. As a result of the Federal Reserve Act of 1913, all national banks are required to join the system; state banks may join if they meet membership qualifications. The Federal Reserve is responsible for monetary policy. The original act set fixed reserve requirements for the U.S. fractional reserve banking system. It allowed each district bank to determine its discount rate, the rate it charged on loans to member banks. The modern Federal Reserve resulted from the Federal Reserve Act of 1935, which allowed the board to determine reserve requirements within defined limits. It became responsible for approving the discount rates of the district banks. Most importantly, the act created the Federal Reserve Open Market Committee, which is responsible for conducting operations in financial markets that increase or decrease the amount of reserves in the system. If the Federal Reserve wants to ease monetary policy, it will use open market operations and increase the amount of reserves through the purchase of financial assets. Conversely, it can tighten monetary policy through the sale of financial assets.

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Independent U.S. government corporation created to insure bank deposits against loss in the event of a bank failure and to regulate certain banking practices. Established after the bank holiday in early 1933, the FDIC was intended to restore public confidence in the system. It insures bank deposits in eligible banks up to $100,000 for each deposit. All members of the Federal Reserve System are required to insure their deposits with the FDIC, and almost all commercial banks in the U.S. choose to do so.

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Largest investigative agency of the U.S. government. It was founded in 1908 as the Bureau of Investigation within the U.S. Justice Department. J. Edgar Hoover served as its director from 1924 until his death in 1972. Since 1968 the director, who reports to the attorney general, has been appointed by the president for a 10-year term, subject to Senate approval. The FBI employs more than 10,000 special agents. Its responsibilities include investigating violations of federal criminal law (including in the areas of civil rights and organized crime), collecting evidence in civil cases to which the U.S. is a party, and providing internal security.

Learn more about Federal Bureau of Investigation (FBI) with a free trial on Britannica.com.


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