September 11, 2001
During times of crisis, like 9-11, people want to be reassured that money and credit will be available when needed. After the attacks the Fed helped stabilize the economy by pumping record amounts of liquidity into the financial system through Discount Window lending and Open Market Operations. Since people typically want the reassurance of cash during a disaster, the Fed also worked to make sure Banks and ATMs had enough cash on-hand to meet these increased needs. In the days following 9-11, the Fed monitored the Payments Systems - including electronic funds transfers and check clearing - to prevent a breakdown in the flow of money and credit, and reassured the nation that the financial system would continue to operate.
August 29, 2005
Food. Shelter. Water. These are top priorities in the wake of a natural disaster like Hurricane Katrina. Once these immediate needs are met, people and businesses need access to cash and their savings to cover emergency expenses. Hurricane Katrina created severe challenges for banks as they tried to meet emergency demands. The Fed implemented emergency operating procedures to ensure that banks and ATMs had enough cash following the storm to meet emergency demand. The Fed also worked with banks to arrange alternative ways to process checks. Working with other regulatory agencies, the Fed monitored the financial conditions of impacted banks and made its Discount Window open for lending. These actions help to keep money and credit flowing through the local economy.
Fall of 2008
When any major shock hits the economy, whether it is a terrorist attack, natural disaster, or panic in the financial markets, people and businesses need access to money and credit. During the fall of 2008, financial markets panicked as massive losses in mortgage-related investments hit. This caused credit markets to freeze and made it difficult for people and businesses to obtain funds. The Fed did many things to encourage the flow of money and credit. It provided liquidity through emergency lending, offered emergency funding to large firms, and supported the economy by lowering a key interest rate to zero. These actions helped stabilize the financial markets and supported the flow of credit to businesses and financial institutions.
