preparation for his own role in history. almost as important were the hundreds of fed economists, lawyers, bank supervisors, and market specialists who worked around the clock to craft creative solutions to every financial market challenge. i will never know how many hours it took to develop and implement all of the programs they presented in a series of emergency board meetings. i do know that they responded to every question and strived to mitigate every risk that was identified. and while the strain was evident in their tired eyes, the collegiality and intellectual rigor that i have come to know as a hallmark of the federal reserve never wavered. finally, for me, was the knowledge of all those small businesses that depended on credit to run their businesses. the fed provided credit to banks large and small. in addition, through other programs, we supported securities made up of loans to households and businesses, including loans for business equipment, for inventory, for insurance payments, for business credit cards, and for loans guaranteed by the small business administration. to be sure, lenders reacted to uncertain economic conditions and weaker borrowers by tightening credit standards. but, with liquidity provided by the federal reserve, loans to borrowers who met the tighter standards continued to flow. the u. s. economy continues to face challenges, but i am convinced that the forceful actions of the federal reserve in 2008 helped prevent what might have been a far worse scenario. the federal reserve was originally created to guard against financial panics. but in modern times, many people think of its primary role as responsibility for monetary policy. the congress has given the federal reserve two objectives, known as our dual mandate, to foster maximum employment and price stability. in its conduct of monetary policy, the fed bis central bankers ’ speeches influences the level of output and the level of prices in the economy through changes to interest rates and credit conditions. during more normal times, the federal reserve ’ s policymaking is focused on short - term interest rates, our main tool for steering the economy. the fed influences the costs of borrowing to buy everything from cars to condos to computers by controlling short - term interest rates. interest rates can be lowered to stimulate borrowing and spending when demand is otherwise weak, or raised to dampen demand and curb inflation. before i arrived in august 2008, the federal reserve had already responded to the weakening in the economy by aggressively lowering its federal funds rate target from 5 – 1 / 4 percent in september 2007 to 2 percent. from a historical

##ing, to be surrounded by so much brainpower and intellectual curiosity. but everyone approaches the work with a serious sense of purpose and collegiality. it is hard for me to describe what it is like to work there, but if you ever get the chance to do so, i would highly recommend it. see alberto alesina ( 1988 ), “ macroeconomics and politics, ” in stanley fischer, ed., nber macroeconomics annual, vol. 3 ( cambridge, mass. : mit press, september ), pp. 13 – 52 ; vittorio grilli, donato masciandaro, and guido tabellini ( 1991 ), “ political and monetary institutions and public finance policies in the industrial countries, ” economic policy, vol. 6 ( 13 ), pp. 342 – 92 ; alex cukierman ( 1992 ), central bank strategies, credibility, and independence : theory and evidence ( cambridge, mass. : mit press ) ; alex cukierman, steven b. webb, and bilin neyapti ( 1992 ), “ measuring the independence of central banks and its effect on policy outcomes, ” world bank economic review, vol. 6 ( 3 ), 353 – 98 ; alberto alesina and lawrence h. summers ( 1993 ), “ central bank independence and macroeconomic performance : some comparative evidence, ” journal of money, credit and banking, vol. 25 ( may ), pp. 151 – 62 ; alex cukierman, pantelis kalaitzidakis, lawrence h. summers, and steven b. webb ( 1993 ), “ central bank independence, growth, investment, and real rates, ” carnegie - rochester conference series on public policy, vol. 39 ( 1 ), pp. 95 – 140 ; and alex cukierman, geoffrey p. miller, and bilin neyapti ( 2002 ), “ central bank reform, liberalization and inflation in transition economies – an international perspective, ” journal of monetary economics, vol. 49 ( 2 ), 237 – 64. each federal reserve bank ’ s class b and class c directors appoint a president. see section 4 ( 4 ), subparagraph “ fifth, ” of the federal reserve act, as amended by section 1107 of pub. l. no. 111 – 203 ( 2010 ). for a fuller discussion of the responsibilities of the board of governors and the federal reserve banks, see the federal reserve system : purposes & functions