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October 3, 2018
This summer I worked for the Federal Reserve Bank of Chicago. It was great because it meant I got to live at home with my family, a fully stocked refrigerator, and a new puppy. After being abroad for the past two summers I knew I wanted to be at home in Chicago for my last summer ever and once I saw on Crimson Careers that the Federal Reserve Banks all had internships and there was one located at home in Chicago I was pumped. Keep in mind I am concentrating in applied math with a focus in economics so to a nerd like me anything to do with the Fed is exciting.
The Federal Reserve System is made up of the Board of Governors (which is not actually a bank but sits in Washington D.C. and tells all the Federal Reserve Banks what to do) as well as 12 different districts each with its own bank. The Fed (aka the Federal Reserve System as a whole) does three main things all to promote national economic growth and financial stability: it regulates banks and other financial institutions, creates monetary policy (i.e. sets interest rates), and makes sure payment systems are functioning (i.e. clears financial transactions and holds bank deposits/supplies banks with cash). A fun fact related to the whole supplying banks with cash part of the fed is that the building I worked in had about $8 billion dollars in cash sitting in the basement, and therefore a lot of security. I spent the summer working in the supervision and regulation department. This is the part of the Fed that is not only responsible for regulating banks but also other institutions like the clearinghouses of large exchanges, insurance companies, and John Deere. Did you know that John Deere, the company that makes farming machinery, is actually the 5th largest lender in the agricultural sector?
Within the supervision and regulation department I was on a team dedicated to regulating the 5th largest bank in the world. Now, since the Fed is a United States Institution, we technically only have jurisdiction over the part of the bank located in the country. However, the bank is such a massive internationally connected organization that we get to hold the bank responsible for some large-scale problems it has with money laundering for infamous Mexican and Columbian drug cartels, financing terrorist organizations, and helping high profile wealthy internationals avoid economic sanctions. It was great to have such a mission-driven focus, being on the team that kept the bank accountable for such financial crimes. I led two main projects during my time at the Fed. The first was creating a dashboard overview of the company from a regulatory financial standpoint. Ever heard of the Fed stress testing banks? Since the 2008 financial crisis, the Fed starting looking at levels of liquidity and capital in the largest banks in the country and what would happen to them in a stressed scenario. For my project I basically had to find the most key financial metrics and stress test results and present them in an appealing way using excel/tableau. The other main project I had was to investigate the legal entity structure of the company. This meant I had to figure out what all of the entities were for and analyze their financials to come up with an idea of how risky each entity was. Large banks will tend to have hundreds of entities but luckily the bank is working on consolidating them so there were only about 50 at the time I did this. I felt like a detective because I got to call the bank a bunch asking for information and asking questions on what information they provided to us.
I loved my time at the Fed. So much of the work done there is both fascinating and meaningful, and I got to work with some of the most intelligent people out there. I learned a lot this summer and had a great time, but for now I am just happy to be back with my team that I love playing the world’s best sport, volleyball, together for one last senior season.