At the October meeting, Timothy Geithner, then president of the Federal Reserve Bank of New York and now Treasury secretary, said: "Developments of financial markets on balance since the last meeting have been reassuring. The panic has receded."

By December, the economy had plunged into the recession, which would officially last until June 2009. Five years later, the economy has yet to fully recover.

The Fed declined Friday to comment on the discussions revealed by the transcripts.

In many places, the transcripts illustrate what has long been known: That the Fed, like most other regulators and economists, was slow to grasp the magnitude of the housing meltdown, the financial crisis and the depth of the economy's weaknesses.

Many analysts, including the rating agencies that gave the mortgage debt high ratings, also badly miscalculated the impact of the mortgage crisis.

Economic growth had slowed sharply in the first quarter of 2007 to below a 1 percent annual rate. And in July and August, employers cut jobs for the first time in four years.

The Fed declined to cut interest rate cuts at its Aug. 7 policy meeting. After that meeting, the Fed issued a statement declaring that the threats to growth had only "increased somewhat." The transcript from that meeting shows that several Fed officials felt that the biggest threat facing the economy was not economic weakness but inflation, which remained mild throughout 2007 and has so since.

A few days after that meeting, BNP Paribas, France's largest bank, announced that it was freezing three funds that had invested in the troubled U.S. mortgage market. That move escalated fears in global markets.

On Aug. 10, the Fed held the first of three emergency conference calls to discuss the emerging crisis. That day, its policy committee took the aggressive step that day of announcing it would pump $19 billion into financial markets. The money was intended to calm turmoil on Wall Street and loosen credit.

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