I am Federal Reserve bound!!

That's right, I FINALLY figured out what I am doing during the final summer of my college career. This summer I will be interning in the Risk & Policy Analysis Unit at the Federal Reserve Bank of Boston. The building outside of South Station that I affectionately refer to as the "cheese grader" (see for yourself http://en.wikipedia.org/wiki/Federal_Reserve_Bank_of_Boston) will be my home for three glorious months!

A lot of people have asked me, "What are you going to do?" WELL, the Risk & Policy Analysis Unit is a part of the bigger Bank Supervision Division of the Federal Reserve. Within this unit there are people that oversee the implementation/policy research of/for of the Basel II Accords (bank regulation stuff), there are people that are doing financial risk models, and monetary policy research. I will be working with four people, 2 CPAs, an Economist, and a former insurance salesman on a research project detailing the behaviors of Money Market Mutual Funds over these past, few (kind of) critical years of recession.

This, of course, begs another question- what is a Money Market Mutual Fund (MMMF)?? Well, basically they are these open-ended funds that mainly invest in short-term debt securities. I know you are thinking (WHAT??), but it isn't that difficult to understand. Basically companies and our government go into debt (YAY) and when they do this they need money to fund that debt- so they divide that debt into a lot little securities that we can buy from them to give them money immediately and then they pay it back to us later with a little extra on top (like mini-loans). These MMMFs are full of these little loans and you can invest in a certain fund and get paid dividends for funding all these different debts. These funds are generally thought to be safe since they usually are full of treasury securities (government debt), commercial paper (debt from companies that need that cash quick), and other bonds. The unique thing about all these is that they are all short-term (expire anywhere from one day later to one year later) and this is why they are considered pretty safe- you get your money back soon. This IS safer because we are far more able to predict market fluctuations in the near future versus further into the future.

What we are trying to investigate this summer is how these big funds' holdings changed during the financial crisis and why- which should be interesting (will report back with answers-hopefully!).

Other than free gym membership and good pay, I should be able to expand my knowledge of finance over the summer and be able to make some pretty awesome risk models by the end!! Thanks Mom, Dad, Grandmas, Aunts and Uncle for supporting me (and Josh and Megan for listening to me ALL THE TIME).