Montgomery resident helps capture Federal Reserve honor
By: Jake Uitti
MONTGOMERY The Federal Reserve Bank and Montgomery Township have something in common, and now Fred Herrmann can say he, too, is in on the pairing.
Mr. Herrmann, a resident of Montgomery who is in his senior year at Northwestern University as a civil engineering major, took part in this year’s Federal Reserve Challenge with his Northwestern University team.
His team took home both regional and national honors. It was the third year in a row that Northwestern’s team won the Midwest regional and the national challenges. The team took home $25,000 in scholarships.
The Federal Reserve Challenge is a competition that brings intercollegiate teams together, first at the regional level, then at the national level. At the competition, students present a mock Federal Reserve monetary policy meeting to discuss what should be done with the nation’s economy.
The current chairman of the Federal Reserve is Ben Bernanke, formerly a professor at Princeton University. Mr. Bernanke is a former president of the township Board of Education and maintains a residence in Montgomery.
Mr. Herrmann’s team, both at the regional and then at the national competitions, discussed what should be done by the Federal Reserve to keep inflation low, to keep unemployment low and to keep economic growth at a high, sustainable level.
Mr. Herrmann, a former cross-country runner at Montgomery High School, took on the role of Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, Va., who holds an aggressive stance on inflation, saying there should be an explicit inflation target so that if the inflation growth rate exceeds 2 percent, the Federal Reserve should swoop in and fix the problem.
"My role in the competition was to play his role," said Mr. Herrmann. "His position is not identical to my own view, but I am also concerned about the inflation picture."
Other members of the Federal Reserve, such as Mr. Bernanke, Mr. Herrmann said, do not hold such an aggressive view on inflation.
Mr. Bernanke holds that the Federal Reserve should take into account the current economy and concerns over housing markets, for example, while being more patient, before a drastic measure is taken regarding inflation, Mr. Herrmann explained.
During the national competition, Mr. Lacker was one of the competition judges.
This, Mr. Herrmann said, made for an interesting experience.
"During the question-and-answer period following the formal presentation, (Mr. Lacker) asked some more specific questions about the statements I made," Mr. Herrmann said. "I had read a lot of his speeches in preparation for the competition. He seemed to smile when I said some of those things were enjoyable. I got to talk to him afterward, too."
After his senior year concludes, Mr. Herrmann said he is going to take a position with Goldman Sachs where he interned last summer as an analyst.
It was during his internship with Goldman Sachs that he was recruited to be a part of Northwestern’s Federal Reserve Challenge team.
"One of the interns at Goldman Sachs was also from Northwestern, he was the captain of the team," Mr. Herrmann said. "He was the one who opened my eyes to the opportunity."
Mr. Herrmann said he learned a great deal while with his Federal Reserve team.
"My role, given my engineering and quantitative background, was sort of the data and statistics guy," he said. "Putting all that together, I felt I learned a lot about economic data, what it means, how it impacts markets."
The process, after Mr. Herrmann was chosen for the team, began in early October. His team put in about 20 hours per week before heading to Chicago, where it won the regional competition.
"We had to step it up and fine-tune our presentation" for the national competition, he said.
Mr. Herrmann was unable to meet Mr. Bernanke, however, as the chairman was tied up elsewhere. So the two were not able to share stories of their hometown.
Despite that, Mr. Herrmann said, the whole experience was very rewarding.
"What was most rewarding was that all the information we put together was actually presented in the Federal Reserve boardroom," he said. "The work we put in finally delivered an end product, our time really paid off."
Before he begins his new position at Goldman Sachs, Mr. Herrmann said he looks forward to finishing school.
Montgomery, however, will always be on his mind.
"Montgomery has a real hometown feel for me," he said. "I was only there for high school, but I really identify it with my hometown. I really felt like I had a positive experience there."

