To grease the ways for this week's record-breaking $4,000,000,000 Federal bond issue,* the Federal Reserve Board cut reserve requirements for the New York City and Chicago banks to 20%. It was the third reduction since August.
Just before the cut the 37 reserve banks in New York City had only $90,000,000 of excess reserves on Sept. 30a five-year low. The Chicago banks were actually reported to have a small deficit. Obviously this left the banks in no position to underwrite any large part of the biggest bond issue ever, so close to half a billion dollars was added to their free cash...
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