Federal Reserve System
The Federal Reserve (also known as The Fed) is a central banking system that controls the monetary system of the United States. Although it acts with the authority of the government, the Federal Reserve is not an official government agency. It was established by the Federal Reserve Act, which was passed by Congress and signed into law by President Woodrow Wilson in 1913. The Federal Reserve is headed by a Board of Governors and a Chairman. The current Chairman is Ben Bernanke; his predecessor was Alan Greenspan.
One job of the Federal Reserve is to control inflation by regulating the free market. One of its main functions is to set the amount of money that banks must keep in reserve and to set the interest rates for money it lends to banks.
In 2008 the Fed became a major player in many new ways, taking over and rescuing (or not rescuing) many major banks, and making trillions of dollars of guarantees. See Financial Crisis of 2008.