Congress gave the Federal Reserve the power to ______ the banking system and ______ certain types of financial institutions.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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The first blank in this sentence should be filled in using the word "regulate."  One of the Fed's major roles is to regulate the banking system.  The Fed is supposed to do things like regulating what percentage of its deposits must be held by a bank and what percent can be loaned out.  

The second blank in the sentence can be filled in using the word "support."  The Fed can be said to support banks and other financial institutions by, for example, lending money to the banks when no other lender is available to them.  The Fed also provides more mundane support services by doing such things as clearing checks that are deposited at one bank but are written on another bank.

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