Black 911: Money, Motive and Technology by Mark H. Gaffney

Author:Mark H. Gaffney [Gaffney, Mark H.]
Language: eng
Format: epub
Tags: History, United States, 21st Century, Political Science, Terrorism, Social Science, Conspiracy Theories
ISBN: 9781634240819
Google: XaSsjwEACAAJ
Publisher: Trine Day
Published: 2016-07-14T23:00:00+00:00

BoNY and the 9/11 Attacks

As we know, the attacks on the World Trade Center on 9/11 proved devastating to the New York financial district. The loss of life was concentrated in the financial industry, which accounted for at least 74% of the civilian casualties. The collapse of WTC-7 sent “I” beams crashing into the Verizon building at 140 West Street, causing telecommunications outages across lower Manhattan.

Due to the attacks, the New York Stock Exchange and the Nasdaq Stock Market never opened. The government securities market was especially hard hit because it opens earlier. Trading of government securities starts at 8 a.m., and the borrowing and lending starts at 7 a.m. On a typical day, most of the trading occurs before 9 a.m. and, as a result, at the time of the 9/11 attacks nearly $600 billion in transactions had already been executed.³⁸

The Bank of New York had offices in the financial district (at One Wall Street and at 101 Barclay Street) and was compelled to evacuate some 8,300 employees. BoNY immediately shifted to its back-up systems and contingency sites, all of which were located outside the City of New York. Although the press reported otherwise, none of BoNY’s backup facilities were affected by the attacks.

The initial backlog was heavy and was due mainly to the widespread phone outages. However, according to Thomas P. (Todd) Gibbons, BoNY’s executive vice president in charge of risk management, BoNY was able to continue processing transactions through its backup facility located in Utica, New York. The initial disruptions lasted for only 2-3 days and by Friday September 14th, the bank had returned to normal processing.³⁹ BoNY actually issued a press release to this effect. Over the weekend of September 15-16, BoNY staff succeeded in clearing the backlog. On Monday the 17th, the New York stock exchange reopened, after a four-day closure, the longest stoppage since the Great Depression.

BoNY is one of the largest funds transfer banks in the world, and at the time of 9/11 was responsible for clearing about 50% of government securities traded in the United States. Chase Manhattan was the other important clearing bank (though in November 2001 it merged with J.P. Morgan to form J.P. Morgan-Chase).

At the time of the attacks, the Federal Reserve Bank of New York also shifted to backup contingency procedures and, thereafter, it functioned smoothly throughout the crisis. The Fed facilitated the markets’ return to normalcy by relaxing the rules on trading, and by waiving overdraft fees and penalties. The Fed also made monies and securities available to Wall Street to mitigate the liquidity problems that continued for many weeks.

The biggest problem was the persistence of failed transactions, known as “fails,” which happen when sellers are unable to deliver securities on time. The volume of fails jumped from $1.7 billion a day during the typical week of September 5, 2001, to $190 billion a day during the week ending September 19th; and it remained high for several weeks. [See chart below] Fails continued to be a problem through the end of the year, but the worst was over by mid-October.

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