Rob Fraim is a reader of mine who puts out his own amusing comments each day via email. Today, on the 17th anniversary of the 1987 stock market crash, he put out his recollections from that day.
I found them so interesting that I suggested Rob (who is blogless) post them here. He gladly agreed. Without further adieu, here is Rob’s version of 1987 Crash Revisited
October 19 – the day that each year gives old-timers in this business a renewed facial tic and post-trauma flashbacks.
“What?” you say. “You mean you were actually there, Grandpa? You remember the Crash of ’87?”
Yes, I was, and yes I do. Confirming rumors that I am, in fact, older than dirt I note that I was in this business in 1987 – and had been for a few years prior (I started in 1983.)
I was having dinner last week with a friend who runs a hedge fund (another graybeard, although he looks younger than me) and we ended up talking about 1987. He had a great story about the whole thing (which I’ll let him tell you about someday if you ever get to have dinner with him.)
So I thought I would take a moment to reflect on my own Crash Experience – and perhaps some of you will share your October 19, 1987 story (provided you’re not a whippersnapper who would be relating what was on freakin’ Sesame Street that day! I really hate you guys. You’re svelte and unwrinkled and smart and energetic and I’m just liable to whup you if you’re not careful.) Maybe we’ll even get a recounting of the aforementioned dinner tale from last week. So if you feel like it, drop me a note with your recollections. If I get enough to make it worthwhile, perhaps I’ll compile them for sharing.)
“What I Did During the War (or What Felt Like One Anway)” or…
“Dr. Strange-Broker or How I Learned to Stop Worrying and Love the Bear” by Rob Fraim
I was 29 years old, 4 years in the business, with two young children. I thought I had investing figured out, didn’t really, and was working for the old Dean Witter (now Morgan Stanley.) The market had been mostly good during my relatively brief time in the business and I had survived the crucial new-guy starvation years and had built up a fairly good book.
So good in fact that I listened to my manager – an advocate it turns out of the “if-you-get-the-brokers-to-really-get-themselves-in-hock-they’ll-be-
forced-to-produce-more-just-to-pay-their-bills” school of thought. (He was also the genius who kept telling us to forget about analyzing stocks ourselves. “Look, we pay those analysts in New York a lot of money to do that. Do you think you know more than those guys? Your job is to sell.” He is no longer in the business, by the way. Last I heard he had left his wife and family and was involved in a relationship with a New Age guru type who had helped him to discover his true “orientation.” He’s raising llamas with this guy and chanting or something. But I digress.”
“You need a new house” he said. “That “piece of#%@ little house of yours isn’t enough. You need to aim higher. Think bigger.” Actually a new house seemed like a pretty good idea, and the kids were getting bigger, and business was good, and hey…what’s a little extra mortgage to a hot-shot like me?
I pasted a picture of a big house on the door of my little office (thanks to the suggestion of my motivational coach in the big office) and embarked on the quest to get me some o’ that.
Before too long I was closing on a house that was twice the size of the old one and came complete with a mortgage that was only 3 times as large. Coolio!
We closed on the house on October 1, 1987.
Oh sure, the market had been a little funky. After peaking in the summer, the market had gone through a pretty good decline – from about 2700 to 2300 or so. In percentage terms, not an insignificant sell-off. But of course it was just: summertime doldrums, a little readjustment, things a little ahead of themselves, no problem, secular bull market, great buying opportunity, hey just look — now we’re getting a second chance at bargain prices.
And don’t forget: “We’re paying those guys in New York a lot of money.”
On Friday October 16, three of us brokers decided to play hooky and “have meetings scheduled” that afternoon. It was one gorgeous fall day. (By the way, for those of you in other locales – particularly you concrete jungle folks – I heartily recommend my neck of the woods in mid-October. The lower Shenandoah Valley of Virginia – smack in the middle of the Blue Ridge Mountains – is a great place to be when the air turns crisp and the trees put on their autumn show. Drop in sometime. I’ll buy you a beer.)
Making the turn after the 9th hole we stopped in the clubhouse to use the pay phone and call the office (pre-cell phone days you youngsters) and my buddy came back looking a little stunned. “Down 90,” he said. Of course these days 90 points doesn’t mean that much. But down 90 from 2300 was a drop. “It’s over” he went on. “The party’s over.”
The weekend was a little tense, since we knew that Monday would open weak. An understatement as it turned out. The combination of a Treasury Secretary with a big mouth and what was called “portfolio insurance” (which somehow involved the commandeering of the free market system by that crazed computer from “2001 – A Space Odyssey” ) came together in an incredibly imperfect storm.
At some point during the day a strange, battlefield-giddiness sort of took over and we just…all….laughed. It was so surreal that all you could do was just laugh. Mortar shell…giggle…another bomb…chuckle. As the day went on, clients were trying to make moves – a lot of panic selling of course, along with more buying interest than you might imagine. There was one small problem though – the systems just crashed. Market orders, limit orders, stop orders – all in, but no reports.
“Are we filled?”
“Don’t know.”
“Should we re-enter the order?”
“Don’t know – it could have failed and you need to re-enter, or you could be duping a trade.”
“When will we get reports?”
“Any minute now.”
As it turned out it was days later in some cases – and a nonsensical mix of nothing dones, good trades, and fills that were two points or five points away from where you figured they should be. As the day went on and we approached down 500 we were really trying to do some buying. But there was no way to know what, when, if, and at what price trades were filling.
In a strange little wrinkle, I figured out something about the Dean Witter system that day. Back then there was an odd-lot order execution system at Dean Witter. If you put in an order for less than 100 shares close to the limit where it was trading, the system would automatically fill it (internally, not actually on the exchange) and then almost simultaneously fill it on the exchange so that the system was flat on the position. By chance, one of the orders that I put in during the period where executions weren’t being reported was for 70 shares of something or another. Boom. Instant fill. So the next order for 400 shares or whatever it was – went in as 99-99-99-and-3. Boom, boom, boom, boom. I became king of the odd lots for about a day until they wised up and shut the auto-fill system down.
On Monday night, the manager made an evening shift mandatory.
“Call your clients. Tell them what’s going on and what to do.”
“Uhhh….what is going on and what should they do?”
“…..I don’t know. Tell ‘em to buy or sell something.”
His other fabulous idea was to call lots of people that weren’t clients of the firm and act like we had told everybody to get out before the crash and then talk them into transferring their accounts. Oh he was prince of a guy all right. I hope he and Serge and the llamas are happy.
That was October 19, 1987. I went home late and stared at all of my new walls. I had a lot more of them than just a few weeks earlier. And the first (tripled) mortgage payment was due on November the 1st.
In the days after the October 19 crash things did stabilize a bit – even rallying some. Corporations stepped in with real buybacks (not the maybe-someday ones we see so often now.) The Fed flooded the system with liquidity and somebody unplugged the hell-spawned computers. The trading systems got back to working and we commenced to explaining why market orders (and limits, and stops) never filled – and more importantly we had the opportunity in the cooler non-panic moments to actually make recommendations and help people figure out how to proceed. “And of course you bought everything in sight since it was the buying opportunity of a lifetime, right Grandpa Rob?” Well, yeah, we did some good buying to be sure. But hand-over-fist-with-reckless-abandon-because-we-knew-for-sure? Well, I wish we had been that smart. But by the time the systems came back in full function we had rallied a couple of hundred and it was awfully hard to find anyone who wasn’t warning of the Impending Great Other Shoe. So yes, we bought, and bought strong, but not as much as hindsight would dictate.
And what most people forget is that the market made its low, not on October 19, but a couple of months later in December. It’s always simple looking backwards, but tougher at the time (as it was in the 1989 United Airlines-related mini-crash, the Persian Gulf war, the 1994 baby bear, the Long-Term Capital mess, the Russian crisis, post-9/11, etc. Or today for that matter.
At the risk of being called a Pollyanna or a head-in-the-sand type, here’s an interesting little exercise. (And you folks know me, and you know my reasonably cautious market stance at present. I have a long bias and am fairly constructive on the market, but my present “play some defense” mode is well documented. And I’m old and feeble and decrepit, so I’m not a reckless sort anymore.)
But take a look at this chart. Pick out 1987 — The Great Crash of our generation. And then 1989 (or 1994 or…)
click for larger chart
Oh…you needed some dates (and a microscope) to help you find them?
click for larger chart
Kind of interesting to look at things from a longer-term perspective sometimes huh?
Anyway kids, that was a day in the life of Young Rob, semi-new broker in 1987.
How about you? Care to share your Crash Day story? (Use the comments below to post . . .)
I’ve gotta run now. Business is pretty good. And I have a meeting with my real estate agent about this house I’ve got my eye on.
The smart guys in New York say it’s all good. And never forget: we pay them a lot of money.
by Rob Fraim
Rob Fraim is a broker and consultant with Mid-Atlantic Securities, Inc. — serving the investment needs of institutions and high-net worth individual clients nationwide. A 21-year veteran in the investment industry, he lives and works in Roanoke, VA.
To receive his daily commentary, send an email with the word "subscribe" in the subject line to Rob Fraim.
Happy Crash Day!
With the stock market in the tank today, I’ll bet you almost forgot, didn’t you? Happy Crash Day! Today is the 17th anniversary of the crash of 1987, when the Dow plummeted 23% in a single day. A “Correction” is…
Happy Crash Day!
With the stock market in the tank today, I’ll bet you almost forgot, didn’t you? Its the 17th anniversary of the crash of 1987, when the Dow plummeted 23% in a single day. A “Correction” is what I recall Ronald…
I was a seasoned broker in my 3rd year with Merrill in Seattle, married for 2 days on Oct. 19th. I remember buying puts on JPM down 6 in the moring and it closed down 19 or some crazy number. I had clients calling up selling everything into the damn mess and swearing off stocks forever. The mood in the office was almost giddy at the shear end of the worldness of it. The thing that sticks out in my mind the most was that MSFT traded back down to its first post IPO price and nobody damn. I think it went on to split 60 times or something but thats another story.
If you lived through the crash in New York, you didn’t live through the crash … London was the place to be to feel the real fear. While Rob was off on the golf course, we were all stuck at home, trying to work out what the hell had happened to the entire Southern United Kingdom. A freak hurricane on the 15th had caused vast amounts of damage; three hundred year old trees ripped up, thousands of houses without power and, of course, no chance at all of the trains running.
‘Course, I was only 14 years old at the time …
I was 2 weeks into my first stockbroking job, having worked as a bank economist. My new job was as a market strategist! Walked 6 miles to work through the storm damage and was obviously one of the poorest and least bothered people in the office.Best image was of a pinstriped partner of SG Warburg (now part of UBS) on TV lamenting that the “average man in the street had probably lost a couple of hundred thousand pounds in the last few days”. In touch as always.
I had just started my equity strategy consulting firm in 1987 and my indicators started turnings sharply negative in the late summer & I ran around for about 3- 4 months before the crash saysing a major bear market was ahead. On the day of the crash, my daughter — a junior high student — had her teacher come in all shaken up talking about the market collapsing. My daughter started cheering. Her teacher said, no, this is a very bad thing, why are you cheering. My daughter said she was cheering because the crash was what her father was calling for
1987 Crash Revisited
A friend of Barry Ritholtz posted an entry in Barry’s Blog the other day. It was his recount of the Oct 19 1987 market crash on the 17th anniversary. I remember that “crash”, I was a programmer/analyst consultant at the…
Hello,
I am a french investor and desperately look for old stock charts , before 1988 (there is no database before in France) and especially stock charts during the 1987 and 1989 stock market crash!
If you have any idea of where I could find such information, please let me aware.
Thank you
Florian
Go to here: http://bigcharts.marketwatch.com/intchart/frames/frames.asp?symb=djia&time=8&freq=1
and under time choose “Custom”
punch in whatever date you want
I was in college at the time. I heard about the crash on the radio and called my father to ask him if I needed to worry about anything. He told me not to. So I didn’t.
Lucky me.
I was in college doing an internship at The Daily Times in Salisbury, Maryland. The editor asked me to call up a couple of brokers in the area and write a story about how local investors were handling the crash.
It was my first big headline (front page, above the fold and everything), but it was the biggest non-story I ever wrote. The crash seemed to hardly cause a ripple out on the DelMarVa peninsula according to the brokers I talked with …
Sam Walton was either the world’s richest man or the richest man in America, I can’t remember which. I read a story in the paper the day after the crash about how it caused his net worth to decline by over $1 billion. The reporter asked him how he felt about it. In his good ole boy, country charm sort of way, he said something like “The business of Wal-Mart is fine, its only on paper.”
But the thing that stuck with me the most is that Sam went on to say that while the market was melting down, he’d already made plans to go hunting so that’s what he did. I was amazed someone could be so nonchalant about losing over $1,000,000,000 in a day.
I remember driving past the Robert Baird office in Milwaukee. They had this grand sign out front that displayed the day’s Dow and the point change except that it wasn’t quite right. The sign was built to show a two digit change in the Dow. They didn’t foresee an over 99 point day.
My old man had been @ Merrill on its block desk for about 16 years by the time 1987 rolled around. I’ve always been curious about the biz, so one time not too long ago I asked him what it was like during the crash. It’s kinda funny. He said all the usual stuff: floor brokers stopped answering their phones, specialists took hour long bathroom breaks, custys went nuts, the world was in a free fall, you know, the usual stuff. So we’re having dinner and my old man is getting excited about talking about the crash because he rarely talks about business at home, and I’m fired up to see him fired up. Know what I mean? And my mom’s there with us, too, and she’s NEVER really had much of an idea about business or what my old man does/did (he still trades). But I ask her anyway if she remembers anything about the crash and that day and of course she says no, she doesn’t really remember anything at all. And my dad starts to laugh, so my mom and I both pipe up and ask what gives. “Your mother was on a mission October 19th, 1987! She was hell bent on picking up my shirts at the dry cleaners, but they wouldn’t give them to her because she didn’t have the ticket. So of course she was convinced that I somehow lost the ticket. So your mother, wonderful woman that she is, called me repeatedly throughout the day searching for that ticket. She was convinced I lost it.” Upon hearing this my mom was of course mortified that she’d birddogged my dad so hard on the day of the crash, but we all laughed about it: the world is collapsing and my mom is gonna get my dad to remember where the hell he/she put that effing ticket if it’s the last thing she does. And she of course got the shirts that day. But she did ask my dad after we finished laughing why he didn’t just tell her the market was crashing, that way she’d leave him alone. My dad laughs again and smiles. And I think to myself, wow, my dad probably didn’t want my mom to leave him alone that day at all. Kinda corny, kinda funny, but nice, too IMO. I guess it’s never fun on the ledge when you’re alone.
was at alex brown in d c then. bot 5 oex puts friday at the close @ $15 a piece, sld tuesday a m at $95. just covered my portfolio losses but what a wild time. a bid in the xmi on tuesday took us off the bottom when the entire market was in full paralysis, it was like everyone stopped trading everything for about 30 minutes and then the lift.
I was completing my fifth year as a sell-side analyst at The Robinson-Humphrey Company. That morning I was being interviewed by a Dow Jones reporter (I believe regarding Lands End – a company that we followed). After 20 minutes we noticed that the Dow had declined over 100 points — which was remarkable in those days.
After the market closed all of the analysts huddled up to discuss where do we go from here. The consensus call was to buy the highest quality stocks given the inevitable recession would put the third tier companies out of business. In reality, the recession only hit Wall Street — Main Street was fine. In turn, it was the busted up $2 and $3 lesser quality stocks that outperformed the Blue Chips on the rebound.
I was completing my fifth year as a sell-side analyst at The Robinson-Humphrey Company. That morning I was being interviewed by a Dow Jones reporter (I believe regarding Lands End – a company that we followed). After 20 minutes we noticed that the Dow had declined over 100 points — which was remarkable in those days.
After the market closed all of the analysts huddled up to discuss where do we go from here. The consensus call was to buy the highest quality stocks given the inevitable recession would put the third tier companies out of business. In reality, the recession only hit Wall Street — Main Street was fine. In turn, it was the busted up $2 and $3 lesser quality stocks that outperformed the Blue Chips on the rebound.
I was in the first month of working my first job at HP. I became aware that it had happened when some co-workers were talking about what a screaming buy HP stock was. At the time I had never bought a stock, and I wasn’t going to take the advice of a couple guys at the office. Probably a good decision, but I regret it now.
My father later told me that he had just put in a major buy order, and called up the broker to bite his head off for not warning him – my father felt that the brokers just *had* to know what was coming! The broker told him that his order had been delayed – to Oct 20.
The ’87 crash for an investor was one of those times you will never forget and you will always remember what you were doing all during that day. The things that stick out in my mind were the remarks, opinions, and predictions of those in the finance industry.
The Oct. ’87 issue of Fortune had George Soros on the cover stating “this was the time to buy stocks”. The man was truly bullish leading up to the crash. So much for expert opinion. I will always wonder how a man of such accomplishments in the world of finance could have gotten it so wrong.
Martin Zweig on Wall Street Week the previous Fri. night was extremely bearish, but everyone else was also. That Fri. there was a feeling of tremendous foreboding; everyone knew it was going to be a terrible Monday. One strategist who really got it right was Elaine Garzarelli who a couple of weeks before the crash gave almost an exact description of what was going to happen very soon. Unfortunately, post-crash she was still bearish thinking the economy was going to be weak for an extended period of time due to the crash and did not recommend reinvesting at that time.
Monday night on the CNN business shows, some of the young hedge fund and mutual fund mgrs. were very pessimistic thinking it was going to get a lot worse. The DJIA was at 1700 and some were predicting ll00 – 1200 on the Dow within a couple of weeks. I distinctly remember David Dremen being interviewed saying “of course there are great values now, but that’s not the question – the question is how much more downside does this market have?”.
As often the case, the best financial advice and action I found was from a non-finance guy at work who stated the day of the crash “I taking the 100% cash position in my 401K and going 100% in the Vanguard SP500 index”. It was like flipping a switch for him. He knew the pessimism was at a maximum and acted on it. I’ve taken a lesson from that – when you feel the pessimism is extreme it’s the best time to go long in a big way. It’s worked well for me ever since.
Having read this, I just have to recount my ‘87 Crash experience.
I remember Friday, October 16, 1987 quite well. Was 30 years old, having just started my second legal job, and I had a stock portfolio worth all of a whopping $15,000.00 ($30,000 in today’s money). I remember that the market went down about 100 points that Friday, and I decided this would be an excellent time open a new mutual fund account in Fidelity Magellan Fund. So, I called up Fidelity that Friday night and asked them to transfer $1,000 from my cash reserve to Magellan Fund. Since it was the weekend, the transfer would take place the following Monday, October 19.
On Monday morning, October 19, I got into the office a little late, and the guy who was stenciling my name on the door of my new office commented that the stock market was “down 300 points.” I said, “Oh, the so the stock market is down 30 points?” and thought nothing of it. “No, the stock market is down 300 points, not 30,” was the reply. At that point, I was a little concerned, so I called Fidelity. Believe it or not, I actually got through. I told the rep, “I have just one question: When you open an account in a mutual fund, does the money go in at the beginning of the day, or the end of the day?” He said, “The end of the day.” At that point, I said “Thank you,” and hung up the phone.
I had always feared a stock market crash. Later that night, realizing that I had just experienced a one, I toted up my losses, which came to about $3,000. My reaction was, “Heck, if that’s all there is to a stock market crash, then I have nothing to fear,” and my love of investing in the stock market was born. (Needless to say, I got my come-uppance in the 2002-03 slow-drip bear market.)
One other story is kind of amusing. The next morning, October 20, I listened to the Mark and Brian radio show (I live in Los Angeles), where the gag of the day was that the two radio hosts asked the listeners to call up with their suggestions about what stock to buy and ended up calling up a broker and investing in something called “DEC.” Now, neither one of them had any idea what DEC was, and they admitted as much, but the funniest line of the whole show was when one of them said, after having just bought DEC, in a way that totally mocked the whole 1980’s worship of the entrepreneur, “We’re entrepreneurs!”
Now, whenever I buy a stock or other investment that just got really trashed, I say to myself, “We’re entrepreneurs!”, and I burst out laughing.
I was 9 years old and just had a flag football game that saturday prior to the crash.
“he’d already made plans to go hunting so that’s what he did. I was amazed someone could be so nonchalant about losing over $1,000,000,000 in a day.”
If I lost $1bn I’d probably shoot something too.
I wore a Beastie Boys t-shirt to school that day. Totally got me noticed by a loose girl in my Geometry class.
Sorry for the snarky comment above. There have been a lot of great posts and shared experiences in this thread, and I appreciate it.
So here’s (hopefully) a value-adding question. Is it really possible these days, with hedge funds dominating the markets and seemingly programmed to buy/sell on every tick, to have a 20% drop in a day? I just don’t see it. Maybe that’s what makes it even more likely, lack of imagination, or hubris. But I just think that so much more of market participation is coldly rational now than ever before – and so human nature and/or emotion is limited in its influence.
I’m probably way off.
I remember the OEX options. That morning, if you bought OEX calls, you could have sold them in the afternoon for the same thing you paid for them in the morning, even though you were totally wrong about the direction. The implied volatility on the OEX options hit about 150%. Talk about vega! I think the at-the-money puts increased by about 1800%. Ever since then, out of the money index puts have been skewed expensive.
To the question about french charts, check out globalfindata.com
I love Roanoke. HUGE NASCAR race in Martinsville this weekend.
I’ve always done well by waiting for peaks in optimism and selling until we reach a peak of pessimism. I only have two positions:
100% cash
and
100% broad-based ETFs.
We were young investors and just loved watching our sweet lil IRAs getting pummeled.
Taught me to never trust the market though. When I hear these asshats today wanting to do away with social security, I just shake my head and snarl.
I was driving down to DC for a business meeting and heard about the market on the radio in the afternoon. I pulled over and called my broker and told him to move everything into the market (my vast fortune of maybe 10-20k or so had been mostly sidelined due to my perma bear sensibilities). He sounded like I must be nuts but kind of grateful. I thought the economy felt sound. Little did I know how close the market was to freezing up. Clearly the best move I’ve ever made but I didn’t get in by the COB so I bought a mutual fund at Tuesday’s close, no ETFs in those days.
I only have two positions:
100% cash
and
100% broad-based ETFs.
So which are you now?
i was a young amateur investor in ’87, but i knew enough to know that the market was overvalued, so in august, i bought a couple of puts with a december expiration. god wanted to show me that i was out of my depth, so the week i bought the puts was the week in which the dow, at the time, made its fastest 100 point rise in its history. still, i hung in – until friday, october 16, when basically, my puts finally got to breakeven.
at which point i sold them.
on black monday, i had to fly from boston to tampa, and (oh those days before we could all just watch the data on our desktops) when i got into a cab to the airport, the market was already down 200. by the time i landed, the market had closed, and i immediately went and had a stiff drink.
i would have made, roughly, $50K had i simply held the puts until tuesday a.m., which for me at that time would have been an enormous amount of money. what i like to say is that i would have immediately taken that money and bought 20 shares of berkshire, which had been knocked down to something like 2700 in the crash.
i try not to think about it too often….
however, i did learn a valuable lesson: i was not cut out to trade puts and calls, and i never have since.
I had been a broker with Dean Witter for a couple years. I remember a day in August of that summer Dean Witter’s Technical Analyst had posted that the Market was a screaming buy. On the same page that day their Fundemental Analyst told us to get out of stocks. The firm was basically tellling us— “Guys, you and your clients are on your own, we’re in unchartered waters…” On Mon. the 20th on our squak box I remember one of Dean Witter’s great New York NASDQ guys telling us to ” button up our flak jackets and strap on our helmets” it was going to be a wild ride that day. And boy was he right.
I’ll say this, I made money through the 90’s and past 6
years based on what I learned through the 80’s. Things are a little scary now.
I came to work in the New York offices of JP Morgan Investment Management in early October as an analyst looking at international stocks. I was new and junior enough to see the crash less as disaster and more as drenalin rush with my being at the center of events of historical significance, although I do remember going to the lavatories and hearing someone sobbing in one of the stalls.
At the time Morgan ran Dividend Discount Models which compared expected equity market returns with bond yields for the major equity markets and since late that summer this analysis was indicating that across all markets the expected rate of return from stocks was lower than that of bonds. The firm had been running the models out of sample for at least 5-10 years and they had typically shown positive equity risk premia of 2-3% for most equity markets . By October expected returns from US stocks had fallen to 6% while the 30 year bond then used as the riskfree proxy was above 9% suggesting that stocks were about 20-30% overvalued
The rationale cited for high valuations were the prices that Leveraged Buy Out firms were willing to pay to take companies private and the boom in merger and acquisition activity which was retiring around 3% of the capitalisation of the equity markets , qute similar to the commentary in todays markets.
I was one month into a new job at Fortune 500 company. I had student loan debt, no cash and no brokerage account. I remember my boss saying “This is a great time to buy.” But, the thought was completely lost on me as I had absolutely no way to act upon it.
The 87 crash was entirely due to a poor monetary policy. Member commercial bank legal reserves declined at their sharpest rate since the beginning of the series.