Maestro — Chapter 5

1. 1. President Bush acknowledged the U.S. was in an economic slowdown or recession in early 1991, with Gulf War uncertainty compounding the situation.
2. 2. Greenspan lowered the fed funds rate by 1/4 percent on January 8, 1991, using asymmetric directive authority without a formal FOMC vote.
3. 3. Greenspan received a top-secret briefing from Defense Secretary Cheney on January 16, 1991, the day Gulf War air strikes began.
4. 4. On February 1, 1991, Greenspan cut rates by 1/2 percent without a formal FOMC vote, prompting mild objections from some bank presidents.
5. 5. Greenspan appointed a task force to clarify his authority under asymmetric directives after the February 5 FOMC meeting.
6. 6. A Wall Street Journal story on April 4, 1991, reported a dispute over Greenspan's authority, followed by a front-page article titled 'The New Fed: Democracy Comes to the Central Bank.'
7. 7. On April 12, 1991, Greenspan convened an early FOMC conference call to propose rate cuts after a favorable CPI report, but faced unexpected opposition.
8. 8. Greenspan unilaterally lowered rates by 1/4 percent on April 30, 1991, after the April 12 setback, and faced no challenges from the FOMC.
9. 9. President Bush reappointed Greenspan as Fed chairman on July 10, 1991, after months of delay and speculation about a quid pro quo on rates.
10. 10. In July 1991 testimony, Greenspan declared the recession over and forecast solid growth, but the economy nosedived over the next five months.
11. 11. On December 19, 1991, the Board of Governors voted 6-1 to cut the discount rate by a full 1 percent to 3.5%, the lowest since 1964.
12. 12. Over 1991, the FOMC lowered the fed funds rate from 7% to 4% in ten separate moves, reflecting deep economic trouble.