September 11 Commission Report - Gnostic Liberation Front

A key consideration is the pre-9/11 daily average for this balance: “For commercial
banks, these balances consist of either required reserve balances, excess reserve balances,
or service-related balances.3 These balances and service-related balances for August
2001 averaged $14.65 billion per day.4 (Liquidity Effects of the Events of September 11,
2001, James J. McAndrews and Simon M. Potter, Federal Reserve Bank of New York
Economic Policy Review, November 2002, p.60.) This makes the actual surges due to
the attack show a net impact of $352 billion on the account balance over the remainder of
the week .
Federal Reserve Balance
adjusted for normal daily
average to reflect true
impact of attack.
Reported
Balance
(Billions)
Adjusted Balance
Due to Attack
(Billions of
Dollars)
September 12 44 29
September 13 104 89
September 14 121 106
September 15 111 96
September 16 46 31
What appears to be the case is that the Federal Reserve imbalances reported on three
consecutive days in the aftermath were largely concentrated at the Bank of New York,
which is reported to represent over 90% of the imbalance, suggesting the Bank had been
the recipient of massive fund transfers, and unable to send out transfers.
“At one point during the week after September 11, BoNY publicly reported to be overdue on $100
billion in payments. (Beckett, Paul, and Jathon Sapsford, Rebuilding Wall Street: How Wall Street's
Nervous System Caused Pain,Wall Street Journal, September 21,2001)” reported in [Payment System
Disruptions and the Federal Reserve Following September 11, 2001, Jeffrey M. Lacker, Federal
Reserve Bank of Richmond, Richmond, Virginia, 23219, USA, November 17, 2003 p.6.]
This supposedly was due to major communication and system failures.
“The crucial government bond processing, for example, had a system in which a second computer was
receiving and processing all the data going into the main computer, making it ready to pick up at a
moment's notice…. As it turned out, though, even the expensive backup system was unable to get the
government bond business up and running smoothly. That is largely because of problems maintaining
the communications links that receive information on trades from its customers and report their
positions back to them. ''In many cases our backup sites were dealing with our customers' backup
sites,'' Mr. Renyi said. And though the bank had established communications lines in advance
connecting these various backup centers, they often were of low capacity and typically had not been
fully tested and debugged. Even a week after the attack, the Bank of New York was having trouble
with some crucial communications links, like its connection to the Government Securities Clearing
Corporation, a central part of the government bond market. On several days that week, the bank had to
drive computer tapes with its trades to G.S.C.C. offices.” [Wall St. Lifeline Shakes Off Dust, and
Critics; Disruptions Put Bank of New York to the Test , Saul Hansell with Riva D. Atlas, New York
Times, October 6, 2001]
“On September 11, we were able to continue processing, as our funds transfer business unit is in Utica,
New York, until the telecommunications lines went down later in the day in lower Manhattan. After
THE SEPTEMBER 11 COMMISSION REPORT Page 375