A $30-billion bail-out was blamed on a ‘glitch.’
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Federal Reserve Board Chairman Paul A. Volcker said a programming flaw was responsible for a massive computer failure that left Bank of New York temporarily $30 billion in the red last month. The problem threatened to disrupt the financing of the federal deficit and prompted the biggest federal bank bail-out in history. Bank of New York is one of the major clearinghouses for trading of federal securities. A crisis was averted by a $22.6-billion overnight loan from the Fed to the bank. The fully secured loan was repaid the next day.
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