Then-Federal Reserve Chairman Ben Bernanke speaks in 2008 on housing and housing finance, at the Federal Reserve in Washington. Federal Reserve officials agonized throughout 2008 over how far they could go to stop a financial catastrophe that threatened to pull the economy into a deep recession, transcripts of the Fed’s policy meetings that year show.WASHINGTON – The Federal Reserve agonized throughout 2008 over how far to go to stop a financial catastrophe that threatened to pull the economy into a deep recession, transcripts of its policy meetings that year show.
“We’re crossing certain lines. We’re doing things we haven’t done before,” Chairman Ben Bernanke said as Fed officials met in an emergency session March 10 and OK’d never-before-taken steps to lend to teetering Wall Street firms, one of a series of unprecedented moves to calm financial markets and aid the economy. “On the other hand, this financial crisis is now in its eighth month, and the economic outlook has worsened quite significantly.”
The crisis had been building for months. In an emergency conference call Jan. 21, Bernanke had rallied support for a deep cut in interest rates. He warned that market turmoil illustrated investors’ concerns that “the United States is in for a deep and protracted recession.”
Bernanke apologized to his colleagues for convening the call on the Martin Luther King holiday. But he felt the urgency of the crisis required the Fed to act before its regularly scheduled meeting the next week. The Fed approved a cut of three-fourths of a percentage point in its benchmark for short-term rates.
On Friday, the Fed released hundreds of pages of transcripts covering its 14 meetings during 2008 — eight regularly scheduled meetings and six emergency sessions. The Fed releases full transcripts of each year’s policy meetings after a five-year lag.