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, June 30, 2008

NRG's Princeton-Based Employees Lend a Hand on Global Giving Volunteer Day

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PRINCETON, N.J., Jun 30, 2008 (BUSINESS WIRE) ----Over 90 employees at Princeton-based NRG Energy, Inc. (NYSE: NRG) participated in the Company's first ever broad-based Global Giving Volunteer Day, lending a hand to five charitable organizations throughout Mercer County.

The day's philanthropic events included:

-- Refurbishing computers, painting residential apartment buildings and providing important administrative support for the summer camp at the headquarters of HomeFront, an organization that helps families break the cycle of poverty and homelessness;

-- Weeding, mulching and planting at the Children's Garden at Isles, a Trenton-based association that fosters self-reliant families in healthy, sustainable communities;

-- Sorting food and loading supplies onto agency vehicles at the Mercer Street Friends Food Bank in Ewing;

-- Cleaning and gardening at the YWCA of Princeton; and

-- Taking the entire fifth grade class from Trenton's Cadwalader School, who are involved with the Big Brothers Big Sisters of Mercer County program, on a field trip to the Franklin Institute.

"NRG's Global Giving is not simply about donating dollars; what really resonates is the dedication of our employees to live our core Company values, especially respect for our communities and for each other," said David Crane, President and CEO, NRG Energy. "Today was a rewarding day for NRG staff and the organizations we support."

HomeFront's Executive Director, Connie Mercer, thanked NRG for its volunteerism, citing the fact that the NRG team "worked hard and smart and accomplished so much. Thank you for this wonderful infusion of good energy."

Patricia Orr, Director of Public Relations at the YWCA, also expressed great appreciation for the NRG team. "On behalf of everyone here at the YWCA, I thank you and your crew so much for all your hard work. The basement looks better than it has in 20 years and the nursery and camp people are overwhelmed with the amount of work that was accomplished."

NRG's Volunteer Day is just one of the many employee-led efforts sponsored by the Company's Global Giving initiative. Over the past four years, NRG has made financial grants to non-profit organizations that address vital community needs through targeted and sustainable service programs consistent with the Company's four focus areas: community and economic development, education, environment and human welfare.

About NRG

A Fortune 500 company, NRG Energy, Inc. owns and operates a diverse portfolio of power generating facilities, primarily in Texas and the Northeast, South Central and West regions of the United States. Its operations include baseload, intermediate, peaking, and cogeneration and thermal energy production facilities. NRG also has ownership interests in generating facilities in Australia and Germany. NRG is a member of USCAP, a diverse group of business and environmental organizations calling for mandatory legislation to reduce greenhouse gas emissions. NRG is also a founding member of "3C--Combat Climate Change," a group that calls on the global business community to lead in designing the road map to a low carbon society.

More information on NRG is available at www.nrgenergy.com

* A photo to accompany this news release is available upon request.

SOURCE: NRG Energy, Inc.

NRG Energy, Inc.
   Meredith Moore, 609-524-4522 or Lori Neuman, 609-524-4525

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