Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, February 5, 1991 TAG: 9102050059
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
As of the close of business Monday, all of Virginia's major statewide banks had reduced their prime interest rates to 9 percent.
The lower rate went into effect Monday at Dominion, Signet, First Virginia, Crestar, Sovran and Central Fidelity banks.
Several of the nation's banks, including No. 1 Citibank, cut their prime Friday, just minutes after the central bank lowered its key discount rate to 6 percent from 6.5 percent.
The discount-rate cut was the second in six weeks and came amid mounting pressure by the Bush administration to lower interest rates to prevent the recession from deepening.
The discount rate is the interest the Fed charges member banks. When it is lowered, so are the banks' cost of funds, enabling them to trim the interest they charge on a variety of business and consumer loans.
Chase, the nation's second-largest bank, and Mellon, the 21st-largest, said their prime-rate cuts were effective immediately.
The prime rate reflects a bank's costs of borrowing money, including interest it pays on savings accounts or certificates of deposit, and trails more subtle increases in other interest rates.
The rate is watched closely because bankers use it as a basis for calculating loans to businesses and for determining many types of fixed- and adjustable-rate consumer loans. Home equity loans are included in that category.
The prime stood at 10 percent at the start of 1991. It went to 9.5 percent on Jan. 2, several days after the Fed cut its discount rate half a percentage point to 6.5 percent.
by CNB