Before the Fall: Disaster Myopia at the Fed

Like many other journalists who write about the Federal Reserve, I spent Friday morning reading the policy discussions that took place inside the central bank in 2007, as the global financial system teetered on the brink of collapse. Under a commendable policy of glasnost, introduced by Alan Greenspan and extended by Ben Bernanke, the Federal Open Market Committee, the Fed’s policy-making arm, now releases full transcripts of its deliberations after a delay of five years.

Covering eight meetings (four of which lasted two days each) and three emergency conference calls, the newly released transcripts run thousands of pages—a boon for future historians, as well as for reporters looking for nuggets to enliven their Twitter feeds. For anybody interested in what turned out to be the biggest financial crisis since the nineteen-thirties, it is fascinating to relive the Fed’s internal debates, as it grappled with the collapse of the market for subprime mortgage bonds and its ramifications for Wall Street and the broader economy.

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