1. The Federal Reserve on Wednesday offered a new window on its response to the Great Recession, publishing complete transcripts of the 11 policy-making meetings held by Fed officials during 2009.

    In the early months of that year, the Fed pressed ahead with the bold measures it had initiated in 2008 to arrest the financial crisis. By summer it had largely succeeded, and economists would later determine that the economy stopped shrinking in June. Officials then began to grapple with how the Fed could best support and hasten a recovery.

    The transcripts, released after a standard five-year delay, provide more than 1,800 pages of details about the deliberations led by former chairman, Ben S. Bernanke. Janet L. Yellen, now the chairwoman of the Fed, also participated as president of the Federal Reserve Bank of San Francisco.

  2. Photo
    Ben S. Bernanke, the chairman of the Federal Reserve, testifying before Congress in March 2009. Credit Matthew Cavanaugh/European Pressphoto Agency
    January – March 17:
    Responding to the Crisis
  3. Jan. 10

    Fed Actions The Fed launches its “quantitative easing” campaign with the purchase of mortgage bonds.

    Over the next six years, it will eventually amass more than $4 trillion in mortgage bonds and Treasury securities.

  4. Jan. 13

    Public Remarks Mr. Bernanke warns that the highly unpopular job of using taxpayer money to bail out financial institutions in the United States and other countries was far from over.

  5. Jan. 16

    Emergency Meeting Officials from the Fed display deep discomfort with a bailout program the central bank, the Treasury department and the F.D.I.C. had negotiated with Bank of America. Mr. Bernanke adds later that his discomfort is being eased by the fact that the Treasury department, through its T.A.R.P. bailout resources, is taking more risk of loss than the Fed.

    Along with Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, Mr. Bernanke also notes how Bank of America got in such trouble to begin with, namely from its acquisition of Merrill Lynch during the Lehman Brothers collapse. Later, Mr. Lacker accuses Bank of America of not being forthright about when it learned of the Merrill Lynch losses.

    Also at the meeting, Fed officials discuss their communication strategy around inflation, and Mr. Bernanke expresses deep worry about acting in ways that would prove politically toxic. He had consulted with members of the incoming Obama administration who, he relays, had no substantive objection with the Fed moving to a more explicit inflation target, but didn’t want to face political blowback. Janet L. Yellen, the president of the Federal Reserve Bank of San Francisco, argues that being explicit about inflation goals could help assuage fears the Fed was risking hyperinflation.

    Mr. Lacker: “This obviously is an uncomfortable thing for any central bank to do.”

    Mr. Bernanke: “I agree with Jeff that this is uncomfortable."

    Mr. Bernanke: “This whole situation was stimulated by a call from Ken Lewis just a few weeks ago to the effect that the losses that Merrill Lynch was going to report at the end of the fourth quarter had risen on the order of $10 billion or $15 billion in just a couple of weeks, in terms of what they were reporting to Bank of America. So these losses were not anticipated, certainly not at the time of the merger agreement, and they were actually quite a shock.

    Mr. Lacker: “There are press reports today coming out of the Bank of America earnings call that suggest that they learned about these losses only in the days following their shareholder vote on Dec. 5 or something like that. These were actually accumulating from just early November, and the erosion of earnings took place over a five-week period at Merrill, so they accreted within the organization. They knew about it to some extent, as it was happening in late November and early December.”

    Mr. Bernanke: “Their view was that whatever we did needed to be very carefully managed to avoid getting blown out of proportion in the political sphere. So we will work very carefully and closely with the Administration in thinking about this, not only in the substantive details but also in terms of the political communication.”

    Ms. Yellen: “There is growing concern that the Fed is printing money with abandon to stimulate the economy, and the combination of trillion dollar deficits and trillions of dollars of money creation can have only one outcome in the long run, which is high inflation that debases the currency. Now, I think this reasoning is completely misguided, but it is out there, and I think we need to consider it because it is dangerous for our credibility as an institution. So I also think we have to say that we are not willing to tolerate very high inflation.”

  6. Jan. 20

    Decisive Moment Barack Obama becomes the 44th president of the United States.

  7. Jan. 27-28

    F.O.M.C. Meeting The Fed had announced in November 2008 its intention to buy mortgage-backed securities, a strategy that eventually would become central to the central bank’s monetary policy. But at the time, the statement was not authorized by the full Federal Open Market Committee, which sets monetary policy. In this meeting, Mr. Bernanke apologizes to his colleagues for the procedural misstep.

    Also, in discussing a range of programs the Fed had implemented to try to funnel money to credit markets that had broken down during the financial crisis, Mr. Lacker, the Richmond Fed president, argues that they should rightly be undertaken by the Treasury Department rather than the Fed because they fundamentally are a tool of fiscal policy, not monetary or bank regulatory policy. Mr. Bernanke, interestingly, agrees—to a point.

    Ms. Yellen warns of the extent of the downturn.

    Mr. Bernanke: “At the time, I felt comfortable with that decision. Since then, given how central the M.B.S. purchase program has become to our policy and given the issues of governance that have been raised and we have all discussed, I now believe that I made a mistake in doing that — I should have consulted more closely and then taken a vote of the F.O.M.C. So I want to pledge to you that I will not take any similar actions in the future without a formal consultation.”

    Mr. Bernanke: “I think, in principle, that we agree that it would be better to have all of this done by the Treasury. I think we have to accept political realities, prioritize, and try to address the most important issues first and see how far we can get.”

    Ms. Yellen: “We are in the midst of a very deep and protracted downturn, and I have to squint really hard to see any light at the end of the tunnel.”

  8. Feb. 7

    F.O.M.C. Meeting The Federal Open Market Committee considers extending the Term Asset-Backed Securities Loan Facility program, or TALF.

    Under the program, the Fed buys up securities backed by automobile loans, credit card debt and business debt ranging from equipment leases to commercial real estate mortgages.

    Three days later, the Fed announces the program's expansion to what could be as much as $1 trillion.

  9. Feb. 10

    Decisive Moment Timothy F. Geithner, the Treasury secretary, unveils a sweeping plan to restore confidence in the nation’s financial system. His performance is shaky, the details are sketchy, and the Dow Jones industrial average falls almost 5 percent.

  10. Feb. 17

    Decisive Moment President Obama signs into law the American Recovery and Reinvestment Act, better known as the $787 billion stimulus.

  11. Feb. 18

    Public Remarks Mr. Bernanke becomes the first Fed chairman to take questions from journalists in a public forum.

    Mr. Bernanke: “The Federal Reserve has done, and will continue to do, everything possible within the limits of its authority to assist in restoring our nation to financial stability.”

  12. Feb. 25

    Fed Action The Federal Reserve announces stress testing of large banks.

  13. March 11

    Public Remarks Mr. Bernanke calls for a broad overhaul of financial rules that would include a powerful new regulator to keep a much tighter grip on institutions considered “too big to fail.”

  14. March 15

    Public Remarks Mr. Bernanke appears on “60 Minutes” and gives a tour of his hometown, Dillon, S.C. It is the first broadcast interview with a Fed chairman.

    Mr. Bernanke: “We are seeing progress in the money market mutual funds, and in the business lending area. And I think as those green shoots begin to appear in different markets — and as some confidence begins to come back — that will begin the positive dynamic that brings our economy back.”

  15. March 16

    Decisive Moment The Obama administration lets the insurance company A.I.G. pay $165 million in retention bonuses to employees of the unit that brought the company and the economy to the brink of collapse.

  16. Photo
    Timothy F. Geithner, the Treasury secretary, left, and Ben S. Bernanke, the Fed chairman, prepare to testify before the House Financial Services Committee. Credit Kevin Lamarque/Reuters
    March 17 – June 30:
    Rebuilding the Economy
  17. March 17-18

    F.O.M.C. Meeting As the Fed was preparing to expand its bond-purchase program in March 2009, some officials, including James Bullard, president of the Federal Reserve Bank of St. Louis, question how large the program could get. The Fed planned to buy another $500 billion in mortgage bonds.

    A Fed employee responds that the Fed was constrained to some extent by the infrastructure of financial markets.

    Mr. Bernanke, the Fed’s chairman, then jokingly proposes a solution.

    Mr. Bullard: “Why not $750 billion? Why not $1 trillion?”

    Mr. Bernanke: “We could just acquire Fannie and Freddie directly.”

    Richard W. Fisher, the president of the Federal Reserve Bank of Dallas, reports that he has called 29 corporate executives to ask how the economy is doing.

    Mr. Fisher: “In fact, one actually called me and said, ‘Do you want some good news?’ And I said, ‘Please.’ He said, ‘Call somebody.’ ” [Laughter]

  18. April 28-29

    F.O.M.C. Meeting The Fed keeps its policy steady.

    F.O.M.C.: “The economy has continued to contract, though the pace of contraction appears to be somewhat slower.”

    Ms. Yellen: “I prefer to take appropriate, bold action to stimulate the economy sooner rather than later.”

    Mr. Bernanke: “If you put all of those imbalances together and you think about what is going to support sustainable economic growth, it is a little hard to see where a robust recovery is going to come from.”

  19. May 7

    Fed Action The central bank announces the results of stress tests showing that most major banks are basically in good health, though it requires 10 of them to raise a total of $75 billion in additional capital.

    This is later seen as the moment that the panic in the financial markets finally begins to subside.

  20. June 1

    Decisive Moment General Motors files for bankruptcy.

  21. June 23-24

    F.O.M.C. Meeting The Fed holds steady in its policy. Ms. Yellen begins having second thoughts about the Fed’s purchases of Treasury securities.

    F.O.M.C.: “The pace of contraction is slowing.”

    Ms. Yellen: “On theoretical grounds, I believe there’s a very strong case that they should have some effect, but it has been awfully hard to identify exactly what that effect is, and I think that we’re beginning to run into costs of pursuing that further. I think our reputation for independence is suffering, and the public is obviously concerned that we’re monetizing the debt and that it’s going to lead to an outbreak of inflation. I have to say that I completely disagree with these views, but I can’t say they’re not prevalent. I encounter them day in and day out. So at the present time, I would say the benefits don’t merit the costs.”

  22. June 17

    Decisive Moment President Obama describes his plans to overhaul federal regulation of the financial system, the first step on the long road to what will later become part of the Dodd-Frank Act.

    JPMorgan Chase and Goldman Sachs are among 10 large banks that repay their federal bailouts on the first day they are allowed to do so.

  23. Photo
    Mr. Bernanke after being renominated in August by President Obama to serve as the chairman of the Fed. Credit Nathaniel Brooks for The New York Times
    July – December:
    The Great Stagnation
  24. July 26

    Public Remarks Mr. Bernanke holds a town hall meeting in Kansas City, Mo., telling a group of 190 people that he is as disgusted as they are about bailing out big banks.

    Mr. Bernanke: “Nothing made me more angry than having to intervene, particularly in a few cases where companies took wild bets.”

  25. Aug. 11-12

    F.O.M.C. Meeting The Fed begins to taper Treasury purchases, noting that economic activity is leveling out.

  26. Aug. 25

    Decisive Moment President Obama nominates Mr. Bernanke to a second term at the helm of the central bank.

  27. Sept. 22-23

    F.O.M.C. Meeting The Fed begins to taper purchases of mortgage-backed securities, saying that economic activity is picking up. Nonetheless, Ms. Yellen expresses concern about the extent of the recovery so far.

    Ms. Yellen: “I foresee a jobless recovery with weak employment growth and persistently high unemployment.”

    Ms. Yellen: “[The recovery] will be tepid by historical standards, leaving unemployment unacceptably high for a long time to come.”

  28. Oct. 19

    Decisive Moment With the unemployment rate in the United States at its peak of 10 percent, the Dow closes above 10,000 for the first time since the crisis.

  29. Nov. 3-4

    F.O.M.C. Meeting The Fed slices $25 billion from its planned purchases of government-sponsored-enterprise debt, noting that economic activity has been continuing to pick up.

  30. Nov. 9

    Fed Action The Fed says all 10 financial institutions determined to be at risk of defaulting earlier in the year, with the exception of GMAC, have raised enough capital to comply with the results of the stress tests.

  31. Dec. 7

    Public Remarks At a speech before the Economic Club of Washington, Mr. Bernanke asserts that the economy has pulled back from the brink of collapse.

    Mr. Bernanke: “We still have some way to go before we can be assured that the recovery will be self-sustaining.”

  32. Dec. 15-16

    F.O.M.C. Meeting Mr. Bernanke makes clear that he is aware of criticism that the Fed still is not doing enough to stimulate the economy. He says he disagrees with this view, in large part because he doubts the Fed’s ability to do more. (Mr. Bernanke will eventually change his mind, launching several more rounds of asset purchases and other efforts to increase the force of the Fed’s stimulus campaign.)

    Mr. Bernanke: “Is policy too easy or too tight at this juncture? You know, there is a fairly substantial view out there—Paul Krugman and Joe Gagnon, for example, have expressed it—that by the Taylor Rule we are still several hundred basis points too tight, that we should, therefore, be doing a lot more asset purchases.”

    Mr. Bernanke: “The reason I personally, at least, am not convinced that that’s the right way to go is that the connection between what actions we can take at this point and effective easing in the markets is not at all clear. For example, on the one hand, mortgage rates are already extraordinarily low—it’s not clear that we can lower them much more.”

  33. Dec. 17

    Fed Action An international committee releases proposed new capital standards for banks, seeking to address one of the most glaring regulatory failures.

    Decisive Moment A Senate committee approves Mr. Bernanke’s nomination 16-7, paving the way for a Senate confirmation the next year.