high loan-deposit Ratios in New York and Chicago(1)

During this period,large city banks,such as those in New York City and Chicago, liquidated substantial amounts of their holdings of U.S. Treasury securities and increased their loans outstanding.As a result, banks in these two cities,as well as banks in many other large cities, came to- have very high loan-deposit ratios.
By September 1969,for example,New York City banks had a loan-deposit ratio of 84 per cent,as compared with 74 per cent for other large member banks and 63 per cent for all other member banks. The New York banks were exceeded in this high loan-deposit ratio only by the Chicago banks,which on this date had an 88 per cent ratio. Eight years later,in September 1977,New York City banks still had a high loan-deposit ratio,though it had fallen some-what to 71 per cent. Chicago banks had a 90 per cent loan-deposit ratio,other large member banks had a 79 per cent ratio,and all other member banks had a ratio of 67 per cent. The loan position of many member banks was even tighter than suggested by these ratio,because much of their holdings of Treasury securities was not available for further liquidity requirements. The Treasury securities had to be held against certain categories of deposits,such as tax and loan accounts and those of other governmental authorities.