The Department of the Treasury reacted quickly, spurred into action by the chairman of Riggs National Bank in Washington, D.C. Being one of the oldest banks in the country, and the only one that could claim having a personal relationship with Alexander Hamilton, the first Secretary of the Treasury, it still carried political weight.
The evening network and local news stations covered the situation critically. Questions proliferated but answers were hard to come by. The largest of the banks and the government announced that a major computer glitch had affected the Electronic Funds Trans- fers which had inadvertently caused the minor inconsistencies in some customer records.
The press was extremely hard on the banks and the Fed Reserve and the Treasury. They smelled a coverup, a lie; that they and the public were not being told the truth, or at least all of it. Only Scott Mason and a couple of other reporters speculated that a computer virus or time bomb was responsible. Without any evidence though, the government and the banks vigorously denied any such possibilities. Rather, they developed a convoluted story of how one money transaction affects another and then another. The domino theory of banking was explained to the public in graphs and charts, but an open skepticism prevailed.
Small businesses and individual banking customers were totally shut off from access to their funds. Tens of thousands of auto- matic tellers were turned off by their banks in the futile hope of minimizing the damage. Estimates were that by evening, almost 5 million people had been estranged from their money.
Rumors of bank collapse and a catastrophic failure of the banking system persisted. The Stock Market, operating at near full capacity after November's disaster, reacted to the news with a precipitous drop of almost 125 points before trading was suspend- ed, cutting off thousands more from their money.
The International Monetary Fund convened an emergency meeting as the London and Tokyo stock markets reacted negatively to the news. Wire transfers and funds disbursements were ceased across all state and national borders.
Panic ensued, and despite the best public relations efforts, the Treasury imposed financial sanctions on all savings and checking accounts. If the banks opened on Friday, severe limits would be placed on access to available funds. Checks would be returned or held until the emergency was past.
Nightline addressed the banking crisis in depth. The experts debated the efficiency of the system and that possibly an unfore- seen overload had occurred, triggering the events of the day. No one suggested that the bank's computers had been compromised.
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New York City Times