When terrorists destroyed the World Trade Center, they disrupted our financial system on an unprecedented scale. Nonetheless, by that afternoon or the next day, most financial institutions had moved to backup sites, using contingency arrangements that had in many cases been strengthened for the century date change; within several days the financial system had recovered most of its functionality.
Still, the Federal Reserve needed to respond to the initial dislocations as well as the more enduring economic fallout. In the days following the attacks, we provided a massive injection of liquidity, initially in the form of direct lending through the discount window and subsequently through open market operations.