<P> According to the board of governors of the Federal Reserve, "It is not' owned' by anyone and is' not a private, profit - making institution' . Instead, it is an independent entity within the government, having both public purposes and private aspects ." The U.S. Government does not own shares in the Federal Reserve System or its component banks, but does receive all of the system's annual profits after a statutory dividend of 6% on their capital investment is paid to member banks and a capital account surplus is maintained . The government also exercises some control over the Federal Reserve by appointing and setting the salaries of the system's highest - level employees . </P> <P> The division of the responsibilities of a central bank into several separate and independent parts, some private and some public, results in a structure that is considered unique among central banks . It is also unusual in that an entity outside of the central bank--the U.S. Department of the Treasury--creates the currency used . </P> <P> The Federal Reserve System is an independent government institution that has private aspects . The System is not a private organization and does not operate for the purpose of making a profit . The stocks of the regional federal reserve banks are owned by the banks operating within that region and which are part of the system . The System derives its authority and public purpose from the Federal Reserve Act passed by Congress in 1913 . As an independent institution, the Federal Reserve System has the authority to act on its own without prior approval from Congress or the President . The members of its Board of Governors are appointed for long, staggered terms, limiting the influence of day - to - day political considerations . The Federal Reserve System's unique structure also provides internal checks and balances, ensuring that its decisions and operations are not dominated by any one part of the system . It also generates revenue independently without need for Congressional funding . Congressional oversight and statutes, which can alter the Fed's responsibilities and control, allow the government to keep the Federal Reserve System in check . Since the System was designed to be independent while also remaining within the government of the United States, it is often said to be "independent within the government". </P> <P> The twelve Federal Reserve banks provide the financial means to operate the Federal Reserve System . Each reserve bank is organized much like a private corporation so that it can provide the necessary revenue to cover operational expenses and implement the demands of the board . A member bank is a privately owned bank that must buy an amount equal to 3% of its combined capital and surplus of stock in the Reserve Bank within its region of the Federal Reserve System . This stock "may not be sold, traded, or pledged as security for a loan" and all member banks receive a 6% annual dividend . No stock in any Federal Reserve Bank has ever been sold to the public, to foreigners, or to any non-bank U.S. firm . These member banks must maintain fractional reserves either as vault currency or on account at its Reserve Bank . As of October 2008, the Federal Reserve has paid interest to banks' holdings in Reserve Banks' accounts . The dividends paid by the Federal Reserve Banks to member banks are considered partial compensation for the lack of interest paid on the required reserves . All profit after expenses is returned to the U.S. Treasury or contributed to the surplus capital of the Federal Reserve Banks . Since shares in ownership of the Federal Reserve Banks are redeemable only at par, the nominal "owners" do not benefit from this surplus capital . In 2010, the Federal Reserve System contributed $79 billion to the U.S. Treasury . </P>

Which of the following is not part of the checks and balances of the federal reserve system