Understanding the Fed: Five Things You Should Know About Consumer Protection and Community Development
May 05, 2026
- Article
- Banking Supervision and Lending
- Everyone's Economy
- Inside the Fed
- Community and Economic Development
The Federal Reserve System is the central bank of the United States. But that doesn't mean it's the kind of bank where you get cash from an ATM, borrow money for a home, or keep a safe deposit box.
As the central bank, the Fed is tasked with a variety of responsibilities that, as a whole, promote the health, safety, and prosperity of the US economy and financial system. While commercial banks provide financial services directly to the public, the Fed provides services to commercial banks. That's why some people describe the Fed as the bank for banks.
The Fed is a nonpartisan institution that includes 12 independent regional Reserve Banks, located around the country, as well as the Federal Reserve Board of Governors in Washington, DC. Each Reserve Bank brings unique data and perspectives from their regions to the Board of Governors, so the economic experiences of all Americans are represented in the formation of monetary policy.
The Fed performs five main functions. They include
- setting the nation's monetary policy;
- promoting financial system stability;
- supervising and regulating financial institutions;
- fostering a safe, efficient, and accessible payments system; and
- promoting consumer protection and community development.
Today, we're highlighting consumer protection and community development and five key things we think everyone should know about this work.
- The Federal Reserve promotes a fair, transparent financial services marketplace
The Federal Reserve is tasked with ensuring that financial institutions under its jurisdiction comply with the framework of laws and statutes Congress has established to provide consumer protection, fair lending, fair housing, and community reinvestment. The Fed supervises bank holding companies, which control one or more banks, as well as banks that serve individuals and consumers, which are incorporated under state law and are members of the Federal Reserve. The Fed does not regulate financial technologies companies, which serve as digital wallets and payments processors.
The Fed's supervision responsibilities protect the 95.8 percent of US households that were banked, meaning at least one member of the household had a checking or savings account at a bank, according to the latest FDIC survey, conducted in 2023.
- Fair, affordable financial services delivered by sound banking practices
The Fed promotes safe, fair, responsive, and affordable financial products and services, and supports efforts by financial institutions to apply technology to increase access to financial services. The Fed works to achieve these outcomes through its research, community engagement, and regulatory oversight.
The Fed monitors banks to ensure they work within the framework of safe and sound operations to meet the credit needs of all segments of their local communities, including low- and moderate-income areas, which are defined as places the banks have a physical branch and take deposits. Given the absence of minimum targets or goals for these operations, Fed regulators consider the capacity of each bank to extend credit to lower-income borrowers, and the local market considerations that may affect lending.
- The Fed collaborates with partners to protect consumers
The Fed collaborates with the Consumer Financial Protection Bureau and other federal financial regulatory agencies that share rulemaking authority for certain regulations that are issued to implement laws, and provide official interpretations and compliance guidance, for the financial industry and the Reserve Banks' examination staff. These provisions consider, where appropriate, the impact on financial institutions of various sizes.
Consumers can learn more about fair and safe banking on the Federal Reserve Consumer Help Center, including filing complaints about financial institutions for the appropriate federal agency to review.
- Tracking emerging consumer issues, economic conditions
The Fed identifies trends and emerging issues that may impact the incomes and financial well-being of consumers and communities. The sources of information include data collected through independent research, findings of bank examiners, discussions with consumer and community groups, and engagement with academic and nonprofit organizations.
The Fed analyzes the knowledge gathered from these activities to identify broad issues that affect consumers and households related to topics such as employment, housing, small business, and financial services. This information informs the Federal Reserve's supervisory, regulatory, and monetary policy responsibilities. Reports, presentations, data tools, and articles are also shared with other policy makers, program administrators, nonprofit organizations, and financial institutions to inform policies programs outside of the Fed. These activities can help banks understand the financial and credit needs of local communities and find ways to meet requirements under the Community Reinvestment Act.
- Promoting economic growth, financial stability in lower-income areas
Fostering economic vitality in all communities is just one way to support the central bank's mandate of stable prices and, particularly, sustainable maximum employment. The Federal Reserve's Community Development function engages communities, conducts research, and connects individuals and organizations to build partnerships and solutions that help improve the economic opportunity of low- and moderate-income individuals and underserved places for a stronger economy for all.
The 12 Federal Reserve Banks focus on community development issues that meet the unique needs of the states they serve. The Atlanta Fed areas of focus include labor force participation and career pathways, community investment and financial services, housing, and community collaborative solutions.