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The Federal Reserve published transcripts from its 2008 meetings on Friday, finally documenting for the public the real-time discussion of the nation's economic managers as they faced the worst fiscal crisis in decades. They did not see it coming.

It wasn't until the end of the year that the economy completely imploded, but, speaking with hindsight, indicators existed much earlier. But the Fed missed, misread, or downplayed them. The Wall Street Journal says that "Fed officials were deeply worried," but even immediately after the September collapse of Lehman Brothers, the event that largely precipitated the collapse of the stock market, then-Fed Chair Ben Bernanke said that "I think that our policy is looking actually pretty good." (The New York Times has a great timeline of the year's discussions that's worth a read.)

By December, Bernanke's view of the situation had changed, according to the Journal.

"You must be thinking whether this means that in every moderate-sized recession henceforth we'll view the Federal Reserve's best policy…" Richmond Fed President Jeffrey Lacker started in one exchange.

Mr. Bernanke cut him off. "It's not a moderate recession, and it's not a normal financial downturn," he said.

Lehman's collapse was a direct result of leveraging failing mortgages, the main driver of the 2008 crash. Janet Yellen, who took over as chair of the Fed earlier this year and was on the Federal Open Market Committee at the time, expressed concerns about the effect of housing on the economy in January of that year, as Business Insider points out. Yellen said that the "severe and prolonged housing downturn and financial shock have put the economy at, if not beyond, the brink of recession." Which, unbeknownst to the group, it had. As the chart below shows, the country had already entered a recession.

She also made a bad prediction: "The unemployment rate edges up this year to 5¼ percent [Ed. – the green line below] before dropping gradually next year toward the natural rate of 4¾." The unemployment rate hasn't been under 6 percent since.

Tim Geithner, the future Treasury Secretary and then-president of the New York Federal Reserve Bank, was more optimistic that January. "As many people pointed out, the fact that we don’t have a lot of imbalances outside of housing coming into this slowdown is helpful," he said. "In the financial markets, I think it is true that there is some sign that the process of repair is starting."

It apparently was not.

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