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The money transfer system was based on vendor-supplied
software, known as MoneyNet, purchased by Norwest during the early
1980's. Although the MoneyNet system did not provide all of the
functionality Norwest needed, following an assessment of all other
software on the market, NTS determined that MoneyNet was the most
viable for its long-term needs. In anticipation that changes to
MoneyNet would be necessary, Norwest acquired the system's source
code from the vendor.
The first major regulatory change to affect Norwest was the
Federal Reserve's so-called 5 p.m. rule. In general, this rule
stated that all wire transfers were to be completed by 5 p.m. each
business day. For years prior to 1986, the Federal Reserve did not
enforce the rule, staying open as late as necessary to accommodate
businesses whose systems failed or which otherwise could not
complete their transfers before 5 p.m. But by the late 1980's, the
Federal Reserve began strictly to enforce its rule, which required
institutions such as Norwest to develop systems that were
sufficiently reliable to ensure the timely transfer of the funds.
The failure to complete transfers by 5 p.m. could result in severe
consequences to Norwest: (1) It would be liable for interest
payouts on the funds it was unable to transfer (an estimated $1
million per day); and (2) it would be potentially liable for any
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