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Full-Text Articles in Social and Behavioral Sciences
United States: New York Clearing House Association, The Panic Of 1884, Benjamin Hoffner
United States: New York Clearing House Association, The Panic Of 1884, Benjamin Hoffner
Journal of Financial Crises
The New York Clearing House Association (NYCH), whose membership included most banks in New York, acted as a lender of last resort during the National Banking Era (1863–1913). In the Panic of 1884, following idiosyncratic deposit runs that forced three NYCH member banks to close, the NYCH membership unanimously agreed to issue clearinghouse loan certificates (CLCs) that banks could use as a temporary substitute for currency in the payment of interbank clearinghouse balances. The NYCH required the borrowing bank to post sufficient collateral to secure the loan, subject to a minimum 25% haircut (excluding US government bonds secured at par) …
United States: New York Clearing House Association, The Panic Of 1890, Benjamin Hoffner
United States: New York Clearing House Association, The Panic Of 1890, Benjamin Hoffner
Journal of Financial Crises
Before the advent of the Federal Reserve System, private clearinghouses provided emergency liquidity support to the banking system during panics. The most notable of these institutions, the New York Clearing House Association (NYCH), supported its member banks by issuing clearinghouse loan certificates (CLCs), short-term collateralized loans guaranteed by the NYCH, as an alternative liquidity source during banking panics; member banks used CLCs exclusively for the purpose of temporarily settling payments with other NYCH members. During the Panic of 1890, the NYCH issued $16.65 million of CLCs between November 12 and December 22, 1890. The Loan Committee received requests from and …
United States: New York Clearing House Association, The Panic Of 1873, Sean Fulmer
United States: New York Clearing House Association, The Panic Of 1873, Sean Fulmer
Journal of Financial Crises
In the absence of a central bank, the New York Clearing House Association (NYCH), a group of 60 New York City banks, stepped in as a private lender of last resort in response to banking runs during the Panic of 1873. The NYCH issued clearinghouse loan certificates (CLCs) to member banks that could use them as temporary payment substitutes to settle their clearing balances with other member banks. Borrowing banks paid a flat 7% interest rate. If a borrowing bank failed to repay its CLCs, the membership of the NYCH internally split the cost based on each member bank’s share …
United States: New York Clearing House Association: The Crisis Of 1914, Sean Fulmer
United States: New York Clearing House Association: The Crisis Of 1914, Sean Fulmer
Journal of Financial Crises
As World War I began in 1914 and European stock markets shuttered, foreign investors turned to removing gold from the United States, sparking fears of bank runs and suspension of convertibility. At the start of August 1914, the New York Clearing House Association (NYCH) again authorized the issuance of clearinghouse loan certificates (CLCs), which could be used by member banks as temporary interest-paying substitutes for money in the settlement of clearing balances. The membership of the NYCH jointly guaranteed CLCs and committed to accepting CLCs as payment during the Crisis of 1914. Unique to the Crisis of 1914, the US …
United Kingdom: Bank Of England Lending During The Panic Of 1825, Sean Fulmer
United Kingdom: Bank Of England Lending During The Panic Of 1825, Sean Fulmer
Journal of Financial Crises
Although historians continue to debate what exactly sparked the Panic of 1825, it is clear that by December of that year, a widespread bank run had erupted, and bankers flocked to the discount window of the Bank of England. While not yet the central bank, the Bank had special legal authority over note issuance and banking, which led to its operation as a semipublic bank. The Bank refused to accept any explicit commitment to act as a lender of last resort, despite being perceived as such by the market. The Bank initially restricted lending to protect its reserves. This policy …
Hong Kong: Private Emergency Loans, 1965, Benjamin Hoffner
Hong Kong: Private Emergency Loans, 1965, Benjamin Hoffner
Journal of Financial Crises
In 1965, new prudential regulations and a real estate downturn triggered deposit runs in the British colony of Hong Kong that impacted local Chinese banks with large exposures to unfinished real estate projects and other illiquid assets. As a result of authorities’ laissez-faire approach to the banking system, Hong Kong had no central bank or any other formal lender-of-last-resort (LOLR) policy when the crisis unfolded. Instead, two private British banks, Hong Kong and Shanghai Banking Corporation (HSBC) and Chartered Bank, provided emergency loans at market rates for commercial banks facing deposit withdrawals. Following each bank run, either HSBC or Chartered …
New York Clearing House Association: Overview, Sean Fulmer
New York Clearing House Association: Overview, Sean Fulmer
Journal of Financial Crises
Between the creation of nationally chartered banks in 1863 and the launch of the Federal Reserve System in 1914, an organization of most New York City banks—originally formed to simplify settling clearing balances—joined together during banking panics to reallocate liquidity and restore market confidence. In the absence of a central bank, this organization, the New York Clearing House Association (NYCH), issued clearinghouse loan certificates (CLCs) that association members could use as temporary cash substitutes for settling clearing balances between banks. CLCs allowed borrowing banks to maintain their cash reserves without costly asset liquidations. The NYCH used CLCs in six crises …