Why does the Fed control interest rates? The Fed more or less controls interest rates using open market operations, but why?

Why are interests rate not controlled by supply and demand?
The fed controls interest rates via supply and demand. 

The fed directly controls only one rate, the rate at which banks can borrow from the government. 

Lowering this rate permits banks to lower the rates they charge while making the same profit. They don't have to do so, but supply and demand says that those banks who do lower their rate can take business away from those which don't, so the market pressures them to more-or-less follow the fed rate's shifts.