How Roger Ferguson Saved America — And The World
Here is an amazing story that had been buried until now in boring reports from the Federal Reserve system. Arliss Bunny recently read the reports, and reconstructs in nail-biting fashion how the Federal Reserve acted with incredible coolness and resolve in 9/11, to keep the nation’s financial system from collapsing. Excerpts (all emphases in the original):
On the morning of 11 September 2001, when Federal Reserve Vice Chairman Roger W. Ferguson, Jr. arrived at work in his office in the Federal Reserve Bank in Washington, DC, he was alone. I don’t mean there weren’t other people in the building it’s just that it was a busy day and all the other members of the Fed Board of Governors who are normally in Washington were traveling. In fact, Ferguson was the only member of the Board who was anywhere near the District. Alan Greenspan, the Chairman of the Fed, along with William J. McDonough, President of the Federal Reserve Bank of New York (which is, in case you didn’t know, the first among equals in the Fed system) were both in Zurich, Switzerland at a meeting of central bankers. Actually, it was worse than that, Greenspan was on a commercial plane in route back to the US and was out of contact with his staff. (Remember, this was before wifi was available on flights.)
Ferguson, considered a deliberative and thoughtful man by his staff, settled into his office and turned on his television to keep track of the markets. When the second plane hit the World Trade Center no one had to tell Ferguson, he knew the country was under attack and he already knew that the attack was aimed at the financial backbone of the world, lower Manhattan. Ferguson declared an emergency and all over the Fed stunned staff found assurance in going through emergency procedures for which they had prepared. The Joint Y2K Committee Ferguson had so recently headed proved to be a windfall of emergency planning and the entire Fed system referred back to those decisions and the associated training throughout the 9-11 crisis. By the time employees could all hear the muffled thump coming from the direction of the Pentagon and smoke could be seen out the windows the staff had secured themselves and the premises and they had started to organize their war room.
In the days and weeks which immediately followed 9-11 analysts drew together important data and lessons (hopefully) learned which inevitably came out of this shared, national experience.The first and most important is that our monetary system, with its redundancies and unusually diverse brain trust was able to absorb a blow intended to, quite literally, disintegrate it. Great human tragedy was not magnified by a financial meltdown which would have spread another form of tragedy nationwide. The virtue of the Feds great big toolbox and the way in which all the tools interact with one another during a crisis was in evidence daily. Certainly, no other organization within the government was positioned to respond as quickly and to reach as deeply down into the fabric of the emergency as was the Fed. Not to be underplayed was also the value the Fed had come to place on person-to-person relationships. On a day when “trust me” really meant something the Fed was able to draw upon well established positive relationships in order to keep the economy of the United States and of the world moving.
Really do read the whole thing. You think of these men and women maybe as gray bureaucrats, or, depending on your politics, maybe even as disreputable characters. But they saved us from something really terrible.
[Via The Browser]