The 12 Federal Reserve Banks are the private sector check and balance to the Federal Reserve. They have three primary roles: 1) To Establish and implement sound monetary policy, 2) To provide a number of financial services to banks (hence the term, Banker's bank -- loans, clearing house, etc.), and 3) The supervision of banks or bank holding companies (companies who own several banks). This system keeps the nation's banks in check for following rules, not discriminating in lending practices, and having enough resources to service its depositors. The Open Market Committee is the Fed's actual arm of decision making -- recommending what to do with the supply of money, interest rates, and the manner in which it lends money to banks, which translates down to the interest banks charge the consumer.

The Fed gets information from government sources, outside economic think thanks, and its own boards. The Fed, too,...

Their job, though, makes sense to keep the economy in balance so that there are jobs, wages being paid, and goods and services being produced. Many critique the Fed as unnecessary and counterproductive in the economy. These critics suggest that interest rates should be low during times of excessive consumer savings and high when net volumes of consumer credit are extended. Because the economy changes so volatile, these critics think that the Fed might even be counterproductive. For the economy to remain healthy and robust, though, the Fed must do whatever it can to ensure continued economic growth.
REFERENCE

Osgood, C. (n.d.). "The Fed Today." Federal Reserve Education. Cited October, 2010,

from http://www.federalreserveeducation.org/resources/fedtoday/