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.

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Friday, July 18, 2008

Three Independent Directors to be Elected to Baltimore Gas and Electric Company Board of Directors

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BALTIMORE, July 18, 2008 /PRNewswire-FirstCall via COMTEX/ ----Constellation Energy (NYSE: CEG) today announced at its annual meeting of shareholders that three independent directors will be elected to the board of directors of Baltimore Gas and Electric Company (BGE). Joining BGE's board are Joseph Haskins Jr., chairman, president and chief executive officer, The Harbor Bank of Maryland; Dr. Carla D. Hayden, executive director of the Enoch Pratt Free Library; and Michael D. Sullivan, chairman and co-founder, LifeSource, Inc. and member of the board of directors of Constellation Energy.

"We are pleased to welcome Joseph Haskins Jr., Dr. Carla Hayden and Michael Sullivan to serve on BGE's board of directors," said Mayo A. Shattuck III, chairman, president and chief executive officer, Constellation Energy. "This expansion of our board will further enhance BGE's corporate governance. We look forward to the leadership and expertise that these independent directors bring to the board and the important guidance they will provide to BGE as we work with all stakeholders to create a stronger energy future for Maryland."

Haskins is chairman, president and chief executive officer of The Harbor Bank of Maryland - one of the top 10 African American-owned and operated financial institutions in the United States. He was among a small group of visionaries who founded The Harbor Bank of Maryland, opening its first branch in 1982. Five years later, he assumed the position as the bank's president.

An active member of the greater Baltimore community, Haskins chairs East Baltimore Development, Inc. and formerly chaired the commission for the Department of Business and Economic Development for the state of Maryland. He also was a board chair for Maryland CareFirst Blue Cross Blue Shield, the Morgan State University Business School - where for years he taught business - and Associated Black Charities. In various capacities, he has advised three Maryland Governors, two Baltimore Mayors and the Comptroller of Maryland.

Haskins has garnered numerous awards and honors, including being named "Entrepreneur of the Year" by Ernst & Young. He earned a Bachelor of Arts degree in economics from Morgan State University, a Master of Business Administration in finance from New York University and a Master of Liberal Arts degree in economics from The Johns Hopkins University. He also completed advanced banking studies at the University of Pennsylvania's Wharton School of Business.

Hayden is the executive director of the Enoch Pratt Free Library. Prior to coming to Baltimore, she was the first deputy commissioner and chief librarian of the Chicago Public Library. Hayden also was an assistant professor in the School of Library and Information Science of the University of Pittsburgh and served as library services coordinator at the Museum of Science and Industry in Chicago.

An active member of the American Library Association (ALA), Hayden was elected president for the 2003-2004 term. She also chaired ALA's Committee on Accreditation and Spectrum Initiative to recruit minorities to librarianship. Hayden currently is a member of the boards of the Maryland African American Museum Corporation, Baltimore City Historical Society, Baltimore Reads, Goucher College, Greater Baltimore Cultural Alliance, Franklin and Eleanor Roosevelt Institute and Library, PALINET, Sinai Hospital and the University of Pittsburgh School of Information Sciences.

She is the recipient of numerous awards, including being named as one of the Women of the Year by Ms. Magazine, Librarian of the Year by Library Journal and one of Maryland's Top 100 Women from Warfield's Business Record and The Daily Record. She is the recipient of the Torch Bearer Award from the Coalition of 100 Black Women, the Andrew White Medal from Loyola College, the President's Medal from The Johns Hopkins University, the Pro Urbe Award from the College of Notre Dame of Maryland, the Whitney M. Young, Jr. Award from the Greater Baltimore Urban League, the YWCA Leader Award, Baltimore and the Barnard College Medal of Distinction.

Hayden has received the honorary degree of Doctor of Humane Letters from University of Baltimore, Morgan State University and McDaniel College. A graduate of Roosevelt University, Hayden earned her Master of Arts degree and Ph.D. from the Graduate Library School of the University of Chicago.

Since March 2001, Sullivan has been a private investor. He is also chairman of the board of ADVANCARE Health Care, LLC and Therapeutic Services of America, Inc., companies in the home health care industry.

Sullivan previously co-founded and served as chairman for two start-up ventures, Golf America Stores, Inc. and Pro-Axon International, LLC. He formerly served as president and chief executive officer of Merry-Go-Round Enterprises, Inc., based in Baltimore. He also was treasurer for Steak & Ale Restaurants of America and controller for General Portland, Inc., a leading cement manufacturer in the United States.

Sullivan has been a member of the Constellation Energy board of directors since April 1999, and currently serves as its Lead Director. He is chairman of the board's Nominating and Corporate Governance Committee and is a member of the Compensation Committee. Sullivan served as a director of BGE from 1992 to April 1999. Sullivan is a former director of Signet Banking Corporation and is currently on the boards of trustees for Loyola University Chicago and Institute of Notre Dame. He graduated from Loyola University Chicago and has received numerous awards, including being recognized by the Apparel Hall of Fame, as Specialty Retail CEO and as Maryland Retailer of the Year.

In addition to Haskins, Hayden and Sullivan, the BGE board of directors includes Mayo A. Shattuck III, chairman, president and chief executive officer, Constellation Energy; Thomas Brady, chairman, BGE, and executive vice president, Constellation Energy; and Kenneth DeFontes, president and chief executive officer, BGE and senior vice president, Constellation Energy.

Constellation Energy (http://www.constellation.com), a FORTUNE 125 company with 2007 revenues of $21 billion, is the nation's largest competitive supplier of electricity to large commercial and industrial customers and the nation's largest wholesale power seller. Constellation Energy also manages fuels and energy services on behalf of energy intensive industries and utilities. It owns a diversified fleet of 84 generating units located throughout the United States, totaling approximately 9,000 megawatts of generating capacity. The company delivers electricity and natural gas through the Baltimore Gas and Electric Company (BGE), its regulated utility in Central Maryland.

SOURCE Constellation Energy Group

http://www.constellation.com

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