A computer glitch at the New York Federal reserve Bank forced some banks to settle their federal funds accounts 4 1/2 hours later than usual on Tuesday.

The fed funds wire closed at 11 p.m. instead of 6:30 p.m. A Fed spokesman said he could not disclosure the nature of the computer problem or how long it lasted.

Snag Started in Mid-Afternoon

The breakdown began to hold up payments around 3 p.m., according to Thomas Pearl, head of the repurchase desk at Chemical Securities Inc., a unit of

Chemical Banking Corp. Mr. Pearl said the computer problems seem to have lasted until after 10 p.m.

The glitch prolonged trading. Fed funds closed near the session high of 4 1/2%, observers said. The average effective rate was 3.5% Tuesdays, below the Fed's current target of 3 3/4%.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.