Top officials at the US Federal Reserve took months to realise that the 2007 financial crisis would rock the world’s largest economy, according to an embarrassing set of meeting transcripts released on Friday.
The transcripts reveal that some Fed policy makers viewed the market turmoil, which erupted in August 2007 on the back of problems in the market for subprime mortgage loans, as good news because markets were pricing in more risk.
The records of the Federal Open Market Committee’s 2007 meetings, which are released with a five-year delay, raise the question of whether the recession would have been less severe if the Fed had reacted faster instead of continuing to forecast steady growth.
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Update: A Washington Post article is here.