The Federal Reserve recently released a transcript of their Open Market Committee (FOMC) meeting in September 16, 2008. The FOMC oversees the Fed’s “Open Market Operations,” purchase and sale of bonds; the Fed controls our money supply through this mechanism. It makes sense for the operational arm of the Fed to convene bright and early—8:30am—that day. This meeting took place in the thick of the financial crisis. Chairman Bernanke opened the session: “Good morning, everybody. Sorry for the late beginning. The markets are continuing to experience very significant stresses this morning, and there are increasing concerns about the insurance company AIG.”
“Would a big size that’s fixed in quantity be most effective? Would an open limit be most effective? I think we have to have those discussions. I think the important thing here—and what we’re going for—is credibility. In a crisis you need enough force—more force than the market thinks is necessary to solve the problem—and we’re going to have to have discussions to determine how much is enough force.”
Later on, the committee formulates a statement on the situation. They debated the last sentence of their statement provoked a surprisingly long debate—about five pages of transcript. Specifically, the committee considered using the word “closely” versus the word “carefully” in “The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.” At one point, the group digs down to roots of grammar, mentioning that “closely” is an adverb as opposed to an adjective.
Despite their prolonged debate, the FOMC unanimously supported their final statement. They eventually settled on “carefully,” which they believed showed genuine and active concern for the situation without implicitly promising a particular policy action on their part.
Credit goes to Marketplace for the original tip on this story.