The week the fed saved the world: an inside glimpse at the Greenspan-McDonough-Ferguson team's backroom maneuvering.

• Author: Temple-Raston, Dina
• Position: Federal Reserve, Allan Greenspan, William McDonough, Roger Ferguson

No one anticipated the September 11th terror attacks, but preparation for Y2K and lessons learned from such things as the 1987 stock market crash and the Mexican peso crisis helped the Federal Reserve avert a financial meltdown.

Federal Reserve Chairman Alan Greenspan had settled into his seat on a return flight from Switzerland when the pilot's voice came over the public address system: "American airspace has just been closed, we'll be returning to Zurich." There was no other explanation. Greenspan tried to use the onboard phone to find out what was the matter, but the lines were all engaged. Instead, Greenspan waited until he landed and then from a phone at the airport called his wife, NBC News correspondent Andrea Mitchell.

"What's happened?" he asked her.

Mitchell, moments away from a live shot with NBC news anchor Tom Brokaw, had no time to talk. But she did offer to leave the phone line open so her husband could hear the grim details of what had transpired that morning. In a seven-minute report, Mitchell told the world, and the chairman of the central bank, that a terrorist attack had toppled the World Trade Center in New York. Another hijacked aircraft had struck the Pentagon. Greenspan listened to the bulletin and then placed another call--this time to Federal Reserve Vice-Chairman Roger Ferguson.

Ferguson had arrived at the central bank on Constitution Avenue at his regular hour--8 a.m.--to prepare for a series of internal meetings and phone calls that had been on his schedule for some time. A little after 9 a.m., the phone rang. A friend from the Securities and Exchange Commission asked Ferguson if he had heard the news--a jet had careened into the World Trade Center, the caller said. (The fact that the SEC had the information so quickly isn't surprising. SEC has a market watch desk and knows of any market-moving events, anywhere in the world, almost as soon as they happen.) Ferguson turned on the television. A short time later the television was not entirely necessary. Ferguson could see, outside his window at the Fed, smoke billowing up from the Pentagon across the river. Another airliner had crashed into an American building. Ferguson's day and the day of everyone in the United States had suddenly, irrevocably changed.

Looking back on the early minutes, hours and days after the September 11th attack, central bankers say that a roster of financial difficulties they had faced in recent years prepared them, unexpectedly, for the...