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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Monday, May 19, 2008

International Investors Announce Support for Independent Chairman at ExxonMobil Corporation

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LONDON, May 19, 2008 /PRNewswire via COMTEX/ ----In an unprecedented step, a significant group of Europe's largest institutional investors are announcing publicly today that they support Proxy Item 5 at the Exxon Mobil Corporation (NYSE: XOM) calling for an independent chairman of the board at one of the world's largest companies. The shareowner vote to separate the Chief Executive and Board Chairman positions at ExxonMobil will take place at the company's annual meeting on May 28, 2008 in Dallas, Texas (U.S.).

The list of institutional investors joining together today to disclose their support for an independent chairman at ExxonMobil include: F&C Asset Management (F&C), London; Co-operative Insurance Society (CIS), Manchester, UK; Morley Fund Management, London; and West Midlands Pension Fund, Wolverhampton, UK.

In addition to the announcement of European investor support, the well-known UK proxy advisory firm PIRC Ltd. has recommended that its clients support Item 5 on ExxonMobil's proxy. PIRC Ltd. is based in London and provides research and proxy voting advisory services to a global institutional clientele.

Karina Litvack, director of Governance & Sustainable Investment at F&C Asset Management, said, "ExxonMobil has built a flawlessly efficient global operation that is the envy of its peers, which it achieves through unmatched discipline and unity of purpose. But what works brilliantly in the field can spell trouble in the boardroom, where debate and openness to external challenge are vital. Despite top-notch individual directors, the company's record over the last decade, particularly regarding climate change, demonstrates that debate has been lacking. By bringing in an independent chairman, the company can better leverage that creativity and challenge, and avoid over-dominance by management. Over our eight-year dialogue, ExxonMobil management has opened its doors to challenging views - now it's time for its board to do the same."

Anita Skipper, head of corporate governance at Morley Fund Management, said, "Exxon has a track record of generating good returns to shareholders. However, we believe that the returns would be more sustainable under a governance structure which separated the roles of Chairman and Chief Executive. This is why we are supporting Proxy Item 5."

Pat Wade, Corporate Governance Manager at Co-operative Insurance Society, noted, "Our 'customer driven' Ethical Engagement Policy implements our responsible shareholding approach through which we want to maximise and protect the value of our customers' long term investments. We consider that a fettered leadership of the board of Exxon, and the absence of an effective programme of shareholder communications, may expose shareowners' interests to unnecessary social, environmental and governance risks."

The international investors are only the latest voices to be added to those calling for an independent chairman at ExxonMobil. Four leading global proxy advisory firms- PIRC Ltd., RiskMetrics Group, Glass Lewis, and Proxy Governance, Inc. -- have each recommended investor clients support Proxy Item 5 on the ballot at the ExxonMobil annual meeting. Their voting analyses and recommendations are relied upon by pension funds, mutual funds and fiduciaries throughout the world.

Robert A.G. Monks, a global leader in the International Corporate Governance Network, and resolution proponent, commenting on the significance of the joint announcement by institutional investors from Europe said, "I join other ExxonMobil investors in the United States who are encouraged by the institutions who are speaking out today in favor of Proxy Item 5, calling for an independent chairman at ExxonMobil. Exxon would do well to heed the growing chorus of international voices in favor of an independent chairman of the board at the company."

With more than three million customers, F&C Asset Management manages over 100 billion pounds Sterling. The West Midlands Pension Fund has over 4.7 billion pounds under management. The Co-operative Insurance, formally Co- operative Insurance Society Ltd., is a large insurance company with revenues of 3.5 billion pounds, and is one of the two main constituents of Co-operative Financial Services. Morley Fund Management is one of the biggest active asset managers in the UK and the third largest asset manager overall.

Considerable investor interest in the independent chairman proposal at ExxonMobil has mounted in the wake of several news conferences in April, featuring members of the Rockefeller Family, Robert A.G. Monks, California Controller John Chiang, Connecticut Treasurer Denise Nappier, and Maryland Treasurer Nancy Kopp.

US proponents of Proxy Item 5 have retained Okapi Partners LLC for advice in communicating with shareholders about the proxy campaign. Shareholders inside or outside the U.S. seeking information about voting their shares at the ExxonMobil meeting should contact Okapi Partners toll-free at +1 877 259 6290.

Investors seeking updates on Proxy Item 5 can also visit http://www.exxonforowners.com for more information.

SOURCE PIRC Ltd., London; F&C Asset Management (F&C), London; Co-operative Insurance Society (CIS), Manchester, UK; Morley Fund Management, London; West Midlands Pension Fund, Wolverhampton, UK

http://www.exxonforowners.com

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