Answer:
The Federal Reserve is the central bank of the United States. Congress created the Federal Reserve System in 1913 to provide the nation with a safer, more flexible and more stable monetary and financial system. The Fed's three functions are to provide and maintain an effective and efficient payments system, to supervise and regulate banking operations, and to conduct the nation's monetary policy. Although all three of these roles are important in maintaining a stable economy, monetary policy is the most visible to most people. Monetary policy is the strategic actions taken by the Federal Reserve to influence the supply of money and credit in order to foster price stability and maintain maximum sustainable economic growth. Through these actions, the Fed helps keep our national economy strong and the world economy stable.
The recent economic turmoil may seem to contradict the last sentence of the previous paragraph. However, for those who are familiar with economic history, it is apparent that the Federal Reserve has been successful in providing better stability to the economy. Yes, it hasn't been perfect, but something as large and complex as the U.S. economy is going to sometimes be unpredictable.
The Fed has a unique public/private structure that operates independently within government but not independent of it. The Board of Governors, appointed by the President and confirmed by the Senate, represents the public sector, or governmental side of the Fed. The Reserve Banks and the local citizens on their boards of directors represent the private sector. This structure provides accountability while avoiding centralized, governmental control of banking and monetary policy.
The Federal Reserve is fiscally independent because it receives no government appropriations. The Fed funds its activities with the interest earned from loans to banks and investments in government securities and from the revenue received from providing services to financial institutions. The Fed's financial goal in providing services is to generate only enough revenue to cover costs. Any excess earnings-money made above the cost of operations-is turned over to the U.S. Treasury. In 2009, the Federal Reserve earned $22.9 billion from the government securities that it holds and it turned over to the U.S. Treasury approximately $47.4 billion. This can be seen on the independently audited financial statements of the Federal Reserve which are available as public record.
The seven-member Board of Governors is the main governing body of the Federal Reserve System. It is charged with overseeing the 12 District Reserve Banks and with helping implement national monetary policy. Governors are appointed by the president of the United States, one on Jan. 31 of every even-numbered year, for staggered, 14-year terms.
Each Federal Reserve Bank has a board of directors, whose members work closely with their Reserve Bank president to provide grassroots economic information and input on management and monetary policy decisions. These boards are drawn from the general public and the banking community and oversee the activities of the organization. They also appoint the presidents of the Reserve Banks, subject to the approval of the Board of Governors. Reserve Bank boards consist of nine members: six serving as representatives of nonbanking enterprises and the public (nonbankers) and three as representatives of banking. Each Federal Reserve branch office has its own board of directors, composed of three to seven members, that provides vital information concerning the regional economy.
Banks that hold stock in the Fed are called member banks. All nationally chartered banks are required by law to hold stock in the Federal Reserve. State-chartered banks may choose to be members, upon meeting certain standards. The amount of stock a member bank is required to hold is set by law and the Board of Governors. A member bank may own no more and no less than the prescribed amount. Also, holding Fed stock is not like owning publicly traded stock. Fed stock cannot be sold or traded. Member banks receive a fixed, 6 percent dividend annually on their stock, and they do not control the Fed as a result of owning this stock. They do, however, elect six of the nine members of Reserve Banks' boards of directors.
Who owns the Fed then? Although it is set up like a private corporation and member banks hold its stock, the Fed owes its existence to an act of Congress and has a mandate to serve the public. So the most accurate answer may be that the Fed is "owned" by the citizens of the United States.
All of the above is verifiable through a careful study of the law and reliable sources of economic information. The law that covers the structure and functioning of the Federal Reserve can be found in 12 USC Chapter 3.