Money: Squeeze on the Banks

The cost of borrowing money has been rising rapidly ever since the Federal Reserve Board decided last December to get tough about inflation. Last week the deliberate squeeze on credit pushed many interest rates to the highest levels since 1929, causing considerable anxiety among bankers. Many moneymen fear that one more turn of the Federal Reserve's monetary screws might, as the Bank of America put it, cause "serious disruption in the financial markets and create conditions that would generate a recession."

Banks last week charged government bond dealers as much as 10% a year for loans to finance their holdings...

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