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2007. The meetings occurred as the country was on the brink of the worst financial crisis since the Great Depression.
Throughout the year, the housing crisis deepened. Banks and hedge funds that had invested big in subprime mortgages were left with worthless assets as foreclosures rose. The damage reached the top echelons of Wall Street.
Beginning in September 2007, the Fed began to cut interest rates and took extraordinary steps to ease credit and shore up confidence in the banking system. But the transcripts also show members greatly underestimated the scope of the approaching financial crisis and how it would tip the U.S. economy into the worst recession since the Great Depression.
Below are excerpts from those meetings:
From the January 30-31 meeting
"Our goal has been, in some sense, to achieve a soft landing, and the question is whether we have missed the airport."
— Federal Reserve Chairman Ben Bernanke.
From the June 27-28 meeting
"I still feel the presence of a 600-pound gorilla in the room and that is the housing sector. The risk for further significant deterioration in the housing market, with house prices falling and mortgage delinquencies rising further, causes me appreciable angst."
__ Janet Yellen, then-president of Federal Reserve Bank of San Francisco. Yellen now is the vice chairman of the Fed.
From the Oct. 30-31 meeting
"Developments of financial markets on balance since the last meeting have been reassuring. The panic has receded. The disruptions are more contained."
— Timothy Geithner, then-president of the Federal Reserve Bank of New York, in a reference to the banks and hedge funds that were facing huge losses because of the real estate crisis. Geithner later was named Treasury secretary in 2009.
"I think the economy is slowing. Even the non-housing part of the economy is slowing a bit. Housing prices are still obviously sliding down. We don't really claim to know much about where they're going to end up or where we are in that process, but it seems that they are falling and probably at an accelerating rate."
"I think it is too early to say that we are out of the woods. ... The pace of deterioration in the housing sector has been more severe than we expected and the problems associated with housing finance seem far from resolution."
"I think the most likely outcome is that the economy will move forward toward a soft landing."
"Except for those sectors (housing and manufacturing), there is a good bit of momentum in the economy."
— Bernanke, who also acknowledged that there was "an unusual amount of uncertainty" around the Fed's economic forecasts.
"The subprime market is a focus of angst, which it should be. ... Just to be polite, some cow patties might show up in the punchbowls of some portfolios, perhaps especially in Europe and Asia."
— Richard Fisher, president of the Federal Reserve Bank of Dallas.
From the Dec. 11 meeting.
—"The result of this is that, although I do not expect insolvency or near insolvency among major financial institutions, they are certainly going to become more cautious."
—"We came up with this projection unimpaired and on nothing stronger than many late nights of diet Pepsi and vending-machine Twinkies."
—Fed economist Dave Stockton, explaining the Fed's optimistic economic outlook at the December meeting.