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We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.
The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.
These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.
When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?
Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.
Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.
Friday, August 01, 2008
Builders FirstSource Signs On to Certified Green Dealer Program
Comtex
DALLAS, Aug 1, 2008 (PrimeNewswire via COMTEX) ----Builders FirstSource Inc. (Nasdaq:BLDR) announced today that it has signed on to the Certified Green Dealer(tm) Program. Builders FirstSource will certify our retail distribution centers through the program.
Certified Green Dealer(tm) is a Web-based "distance learning" program that uses online multi-media training and printed resource materials to educate and certify building material dealers as sources of information about green building and green products.
Builders FirstSource has long served as a primary source of information about products and "best practices" for its contractor customers. Now, with this program, Builders FirstSource will be able to brand its individual dealer locations as third-party certified sources of green building information.
Created under the auspices of LBM Journal, the Certified Green Dealer(tm) Program is not affiliated with any particular national standards-setting organization, such as NAHB or USGBC's LEED program. Instead, the certification is based entirely on demonstrated mastery by the lumber dealer personnel of "best practices" building science and green building basics. More information is available at www.CertifiedGreenDealer.com.
"We're thrilled to be in the program," said Matt Liska, Vice President Sales, who will oversee the program's implementation. "Green products and green practices is a sector that is growing quickly. We are excited to be one of the first companies in our industry to train our entire sales force in the basics of green products and practices. Our builder customers look to us for more than just products and prices; they look to us for value-added solutions. Builders FirstSource is committed to having the most knowledgeable sales force in the industry. This program will allow us to provide our customers cutting edge green building solutions and will further differentiate us from others in our industry."
About Builders FirstSource
Headquartered in Dallas, Texas, Builders FirstSource is a leading supplier and manufacturer of structural and related building products for residential new construction. The company operates in 13 states, principally in the southern and eastern United States, and has 66 distribution centers and 62 manufacturing facilities, many of which are located on the same premises as the distribution facilities. Manufacturing facilities include plants that manufacture roof and floor trusses, wall panels, stairs, aluminum and vinyl windows, custom millwork and pre-hung doors. Builders FirstSource also distributes windows, interior and exterior doors, dimensional lumber and lumber sheet goods, millwork and other building products. For more information about Builders FirstSource, visit the company's Web site at www.bldr.com.
This news release was distributed by PrimeNewswire, www.primenewswire.com
SOURCE: Builders FirstSource
Builders FirstSource, Inc. Media Contact: Matt Liska, Vice President Sales (803) 518-2473 Katie Murphree, Director of Investor Relations and Financial Reporting (214) 880-3595
(C) Copyright 2008 PrimeNewswire, Inc. All rights reserved.
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