And on the Monday after September 11, it lowered the target federal funds rate to help cushion the economic fallout of the blow to consumers’ and businesses’ confidence. Because the Fed worked so effectively, bankers throughout the country could serve their consumer and business customers and thereby help to minimize the economic effect of the terrorist attacks.
The Fed’s role as the supervisor of banking organizations - both as the federal supervisor of the roughly one thousand state-chartered banks that have joined the Federal Reserve System and as the umbrella overseer of financial and bank holding companies - gives the Fed’s staff and policymakers the kind of hands-on experience and knowledge that is essential for a central bank during a financial crisis.