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HISTORY OF THE FEDERAL RESERVE SYSTEM
The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States. It was created in 1913 with the enactment of the Federal Reserve Act, and was largely a response to a series of financial panics, particularly a severe panic in 1907. Over time, the roles and responsibilities of the Federal Reserve System have expanded and its structure has evolved. Events such as the Great Depression were major factors leading to changes in the system.[5] Its duties today, according to official Federal Reserve documentation, are to conduct the nation's monetary policy, supervise and regulate banking institutions, maintain the stability of the financial system and provide financial services to depository institutions, the U.S. government, and foreign official institutions.
The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors (or Federal Reserve Board), the Federal Open Market Committee (FOMC), twelve regional Federal Reserve Banks located in major cities throughout the nation, numerous other private U.S. member banks and various advisory councils. This division of responsibilities of the central bank falls into several separate and independent parts, some private and some public. The result is a structure that is considered unique among central banks. It is also unusual in that an entity (the U.S. Department of the Treasury) outside of the central bank creates the currency used.
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 any of its component banks, but the Government does receive all of the system's annual profits after a statutory dividend of 6% on member banks' capital investment is paid and an 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. The Federal Reserve transferred a record amount of $45 billion to the U.S. Treasury in 2009.
Purpose
The primary motivation for creating the Federal Reserve System was to address banking panics. Other purposes are stated in the Federal Reserve Act, such as "to furnish an elastic currency, to afford means of rediscounting commercial Read more...

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Reebok to pay $25M over toning shoe claims

SARAH SKIDMORE, AP Business Writer
PORTLAND, Ore. (AP) — Reebok will need to tone down advertising for its shoes that claim to reshape your backside.

The athletic shoe and clothing company will pay $25 million in customer refunds to settle charges by the Federal Trade Commission that it falsely advertised that its "toning" shoes could measurably strengthen the muscles in the legs, thighs and buttocks. As part of the settlement, Reebok also is barred from making some of these claims without scientific evidence.

"Settling does not mean we agree with the FTC's allegations," Dan Sarro, a Reebok spokesman, said in a statement Wednesday. "We do not. We have received overwhelmingly enthusiastic feedback from thousands of EasyTone customers."

It's the latest controversy surrounding so-called toning shoes, which are designed with a rounded or otherwise unstable sole. Shoemakers say the shoes force wearers to use more muscle to maintain balance and consumers clamored for them, turning toning shoes into a $1.1 billion market in just a few years. Companies such as Reebok, New Balance and Skechers have faced lawsuits over their advertising claims. But the FTC settlement, announced Wednesday, is the first time the government has stepped in.

Reebok International Ltd. makes a range of toning products, including its RunTone running shoes, EasyTone walking shoes and flip flops and some clothing. The company, which is owned by Adidas AG, said that its toning shoes were one of its most popular product launches ever when they debuted in 2009. The company marketed them heavily with ads featuring women in short shorts and with shapely bottoms; one ad even said the shoes would "make your boobs jealous".

The FTC took issue with Reebok's ads that claimed its EasyTone footwear had been proven to lead to 28 percent more strength and tone in the buttock muscles and 11 percent more strength and tone in hamstring and calf muscles than regular walking shoes. The FTC said it could not disclose if it was pursuing similar actions against other shoe makers.

"We think this is a real victory for consumers," said Dana Barragate, an FTC attorney involved in the case. "We hope it sends a message to businesses that if they are going to make claims they must be justified."

Shoe makers, including Reebok, have funded studies and say they have anecdotal evidence that proves they are effective. Several experts have questioned their validity and the American Council on Exercise, a nonprofit fitness organization, conducted a study that found toning shoes failed to live up to the claims of shoe makers. However, the council said the shoes could be beneficial to one's health if they motivate people to get moving.

Christopher Svezia, with the Susquehanna Financial Group, said many shoemakers have changed their advertising approach as criticism has mounted. "The emphasis has moved to fitness instead of making these kinds of claims and promises," he said. "The question is who is next and how much is it going to cost them." Read more