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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.
Home / Markets / Industries / Energy
Wednesday, July 09, 2008
eSolar Appoints New CFO to Support Growth of Scalable Solar Thermal
Comtex
PASADENA, Calif., Jul 09, 2008 (BUSINESS WIRE) ----Today eSolar(TM), a producer of modular, scalable solar thermal power plants, announced the addition of Merrick Kerr as Chief Financial Officer (CFO). As CFO, Mr. Kerr will oversee the financial and administrative functions of the Company as it expands its presence across the southwest United States and globally. Mr. Kerr joins the Company following the closing of $130 million in funding from Idealab, Oak Investment Partners and Google.org, as well as a recently announced power purchase agreement (PPA) with Southern California Edison to produce 245 MW of solar thermal power.
"As eSolar continues its ambitious growth trajectory, the role of CFO will be imperative in guaranteeing that our strategic and financial planning promotes our market goals," said Asif Ansari, Chief Executive Officer of eSolar. "We are extremely pleased to add Merrick to our team. His addition enables us to secure a key management role that will help support eSolar's rapid expansion and bring our modular, scalable solar thermal power plants to market."
Mr. Kerr brings with him 15 years of experience in the energy industry, including nearly seven years in the renewable energy sector. Throughout his career, Mr. Kerr has overseen the accounting, financial and strategic planning and operations functions of various energy organizations. Mr. Kerr recently served as CFO of Rentech, Inc., a publicly traded company which specializes in the conversion of carbon-based materials into alternative fuels. Prior to that, Mr. Kerr served as CFO of PPM Energy, Inc., the Portland, OR-based non-utility subsidiary of ScottishPower. At PPM, Mr. Kerr was responsible for all project financing activities, including the notable low-cost financing of the Colorado Green Wind Project. Mr. Kerr holds a bachelor's degree in accountancy and economics from the University of Edinburgh and is a member of the Institute of Chartered Accountants of Scotland. Mr. Kerr also completed the Stanford Graduate School of Business Executive Program and the Business Leadership Program at the Wharton School.
"Smart, concentrating solar thermal power is poised to make a significant impact on how utilities large and small across the sunniest parts of the United States generate power. As more and more energy providers look to integrate CSP into their portfolio, they are also looking for the companies that present the best technological solutions to the problems facing the industry," Mr. Kerr said. "eSolar has addressed these concerns, with a design that overcomes the most pressing obstacles characterizing larger renewable energy installations: rapid deployment, ease of scalability, lower price and lessened grid impact."
About eSolar
eSolar is an Idealab company founded by CEO Asif Ansari in 2007 to develop, construct and deploy modular, scalable solar thermal power plants. eSolar's approach marries a low-impact, pre-fabricated form factor with advanced optics and computer software engineering to meet the demands of utilities of any size for clean, renewable and cost-competitive solar energy. By focusing on the key business obstacles that have characterized large solar installations - price, scalability, speed of deployment and grid impact - eSolar has developed a proprietary solution to make a dramatic reduction in the cost of solar thermal technology. eSolar is based in Pasadena, California and has 103 employees. For more information please visit http://www.esolar.com/.
SOURCE: eSolar
Antenna Group for eSolar Casey Cronin, 415-977-1912 casey@antennagroup.com
Copyright Business Wire 2008
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