Imagine going to make an ATM withdrawal and no cash comes out. The doors to the bank are locked and credit cards don’t work.
In his lecture “Behind the Scenes on September 11: How the Federal Reserve Made Sure that Cash Machines and Credit Cards Kept Working,” Ohio State economics professor Stephen Cecchetti said there was potential for this scenario to happen.
“Imagine the pandemonium that would have come following that,” Cecchetti said. “The Federal Reserve kept disaster from happening.”
Cecchetti said the role of the Federal Reserve is to maintain the stability of the nation’s financial system.
“It makes funds available for commercial banks, manages the government’s finances and regulates financial institutions,” said Cecchetti, who was executive vice president of the Federal Reserve Bank from 1997 to 1999.
Cecchetti calls the financial system economic plumbing.
“When it works nobody notices, but just like a water main break, a financial crisis is something that everybody notices,” he said.
On Sept. 11, power and communication was down in lower Manhattan, which is where the Federal Reserve building is located. Cecchetti said that financial disaster was prevented by 20 Federal Reserve employees who slept overnight in the building to make sure cash still flowed the next morning.
“Without these nameless people, we would’ve been in some serious trouble,” he said.
Craig Evers, a senior in economics and English, said Cecchetti’s lecture showed him the significance of the Federal Reserve.
“It’s something that affects all of us, and to a great extent the Federal Reserve system does its job and we don’t notice it,” Evers said. “We shouldn’t just take things like that for granted because it is a big deal. It all comes down to the economy, so knowing the background is important.”
Evers said he came to the lecture because he was once a student in one of Cecchetti’s economics classes.
“It was one of the best classes I’ve had at Ohio State,” he said. “He has an interesting sense of humor, but he also knows his stuff.”
OSU president Karen Holbrook said Cecchetti has a skill for clearly articulating complex economic issues.
“It’s been said that in economic discussions if you’re not confused, then you’re probably not paying attention,” Holbrook said. “That’s not the case with Professor Cecchetti.”
Yesterday’s lecture was a part of the University Distinguished Lecture Series, which recognizes senior faculty members for their outstanding academic achievement.