7 hostages reported dead in 'final assault' on Algerian refinery

CAIRO — Algerian troops raided a remote natural gas refinery Saturday, killing 11 Islamic militants but not before extremists executed seven hostages who for days had been trapped in a deepening international crisis, according to media reports.

Algerian state media described the army mission as the “final assault” to end a hostage ordeal that began in the predawn Wednesday at a gas compound on the Algerian-Libyan border. It was not clear if the hostages killed were Algerians or foreigners.

"It is over now, the assault is over, and the military are inside the plant clearing it of mines," a local source familiar with the operation told Reuters.

The fate of as many as 30 foreign hostages, including an estimated seven Americans, remained unknown. Algerian forces discovered 15 burned bodies as they swept through the compound Saturday to rout heavily armed militants. The militants threatened to blow up the facility and a number of hostages were reported earlier to have been forced to wear explosive belts.  

The Algerian government had refused to negotiate with the extremists, who were linked to Al Qaeda in the Islamic Maghreb and appear to include Algerians, Libyans, Egyptians and at least one commander from Niger.

Algeria’s state-run media earlier reported that 12 refinery workers, including Algerians and foreigners, had been killed since a government operation to retake the plant began Thursday. Unconfirmed media reports suggested that as many as 35 foreign captives may have been killed, including some struck by gunfire from the Algerian military.

The militants, some dressed in fatigues, were armed with machine guns and rocket launchers. The compound is encircled by army tanks, troops and special forces. A Mauritanian news agency that has been in contact with the extremists said the captors were holding two American, three Belgians, one Japanese and one Briton.

The Algerian government on Friday said 573 Algerians and nearly 100 of an estimated 132 foreign hostages had been freed or had escaped. But the chaotic scene at the gas compound at In Amenas has frustrated international officials who complained they were not consulted about the Algerian military’s operations at the plant.   

The natural gas refinery at In Amenas is also jointly operated by BP; Statoil, a Norwegian firm; and Sonatrach, the Algerian national oil company.

ALSO:

Bolshoi artistic director attacked with acid

Pentagon planning to ferry more French troops, gear to Mali

Algeria: Accounts emerge as nearly 100 foreigners reported freed

jeffrey.fleishman@latimes.com

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Wired Science Space Photo of the Day: Sunset on Mars

On May 19th, 2005, NASA's Mars Exploration Rover Spirit captured this stunning view as the Sun sank below the rim of Gusev crater on Mars. This Panoramic Camera (Pancam) mosaic was taken around 6:07 in the evening of the rover's 489th martian day, or sol. Spirit was commanded to stay awake briefly after sending that sol's data to the Mars Odyssey orbiter just before sunset. This small panorama of the western sky was obtained using Pancam's 750-nanometer, 530-nanometer and 430-nanometer color filters. This filter combination allows false color images to be generated that are similar to what a human would see, but with the colors slightly exaggerated. In this image, the bluish glow in the sky above the Sun would be visible to us if we were there, but an artifact of the Pancam's infrared imaging capabilities is that with this filter combination the redness of the sky farther from the sunset is exaggerated compared to the daytime colors of the martian sky. Because Mars is farther from the Sun than the Earth is, the Sun appears only about two-thirds the size that it appears in a sunset seen from the Earth. The terrain in the foreground is the rock outcrop "Jibsheet", a feature that Spirit has been investigating for several weeks (rover tracks are dimly visible leading up to Jibsheet). The floor of Gusev crater is visible in the distance, and the Sun is setting behind the wall of Gusev some 80 km (50 miles) in the distance.

This mosaic is yet another example from MER of a beautiful, sublime martian scene that also captures some important scientific information. Specifically, sunset and twilight images are occasionally acquired by the science team to determine how high into the atmosphere the martian dust extends, and to look for dust or ice clouds. Other images have shown that the twilight glow remains visible, but increasingly fainter, for up to two hours before sunrise or after sunset. The long martian twilight (compared to Earth's) is caused by sunlight scattered around to the night side of the planet by abundant high altitude dust. Similar long twilights or extra-colorful sunrises and sunsets sometimes occur on Earth when tiny dust grains that are erupted from powerful volcanoes scatter light high in the atmosphere.

Image: NASA/JPL/Texas A&M/Cornell [high-resolution]

Caption: NASA/JPL/Texas A&M/Cornell

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Schwarzenegger takes a

LOS ANGELES (Reuters) – Arnold Schwarzenegger, taking inspiration from his idol, Clint Eastwood, returns to the big screen on Friday in the action film “The Last Stand,” his first starring role since he took a seven-year break from moviemaking to serve as California governor.

In a departure from his typical superhuman roles, Schwarzenegger plays a retired Los Angeles policeman forced to protect a tiny border town from a notorious drug kingpin. The 65-year-old former bodybuilder looks every bit his age and admits in the film feeling “old” as he takes a ribbing from some of his significantly younger deputies.

As he embarks on a movie comeback in which he will star in three films over the next 12 months, Schwarzenegger is embracing his age rather than trying to relive his glory days as an action star.

He is taking his cue from the 82-year-old Eastwood – the gun-toting former macho “Dirty Harry” star who eased into more senior roles, winning plaudits for movies like last year’s “The Trouble with the Curve,” and “Million Dollar Baby” in 2004, for which he was nominated for a best-actor Oscar and won for best director.

Schwarzenegger said he was inspired by Eastwood in the 1993 film “In the Line of Fire,” where Eastwood’s character, a Secret Service agent, is short of breath after running alongside the president’s limousine.

“I thought that was so cool,” Schwarzenegger told Reuters TV recently. “I remember how smart it was to acknowledge that because it took the curse off. No one was trying to say, ‘Isn’t he too old for this job?’ That’s what I tried to do in this film since (Eastwood) is a big idol of mine and I always like to learn from him.”

Schwarzenegger said he felt great physically, but that reality had set in. “I’m not a 30-year-old action hero anymore,” he said. “I’m now 65 years old, but I’m still doing action movies. I acknowledge that it’s a different ballgame now. I’m an older guy.”

In “Last Stand,” Schwarzenegger said he agreed to play the part of Sheriff Ray Owens because “it was kind of a traditional Schwarzenegger action movie” with “big blow-ups, a great story, good drama, fight scenes and action from the beginning to the end.”

Schwarzenegger began his transformation to an aging action star in the 2010 film “The Expendables” and its 2012 sequel where he played an aging movie star in an ensemble cast that included Sylvester Stallone and other older stars.

“I was very pleasantly surprised by the positive reaction,” said Schwarzenegger, who was Republican governor of California from 2003 to 2011.

‘I-DARE-YOU ATTITUDE’

Critics have mostly embraced Schwarzenegger’s return with “Last Stand,” despite the film’s modest budget. Film critic Marshall Fine called it “shamelessly entertaining,” while The Hollywood Reporter’s Todd McCarthy wrote that Schwarzenegger “still conveys the old self-confident, humorous I-dare-you attitude towards his adversaries.”

An older, wiser Schwarzenegger chose to play vintage roles in his other upcoming films as well. In September, he teams up again with Stallone in “The Tomb,” where they play aging inmates who plot a prison escape. Next January, Schwarzenegger will star in “Ten,” playing what the film’s director, David Ayer, called “a broken old drug warrior.”

In an interview with Reuters, Ayer said his No. 1 goal in working with Schwarzenegger was “transformation.” The director said he studied every frame of Schwarzenegger’s films, noting that most of the actor’s filmography had “a very specific tone, almost jocular in a sense, where it is not necessarily a psychologically realistic portrayal of a man or a character.”

“You look at all these performances, and the question is, have these characters been treated as something he can transform himself?” Ayer said. “I probably asked him to do things he wasn’t asked before. I knew I could take him someplace new. Some of these scenes required real, heavy lifting.”

In the end, Ayer believes moviegoers will be “blindsided” by what they see of Schwarzenegger on screen.

Yet even as Schwarzenegger attempts to widen his range as an actor, he is not leaving behind the genre films that made him famous.

That means going back to some of his popular franchises of the past, including a new “Conan the Barbarian” film that is expected to go into production later this year and a sequel to the 1988 action comedy “Twins” to be called “Triplets.”

“It’s important I pick projects that the fans, that the audiences like to see,” he said.

He already has another big fan in his friend Stallone, who talked him into acting in the two “Expendables” films.

“What is the definition of a star? Someone who people will wait three hours in the rain to see,” Stallone said. “And people still have their umbrellas out for him.”

(Editing by Peter Cooney)

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Business Briefing | Medicine: F.D.A. Clears Botox to Help Bladder Control

Botox, the wrinkle treatment made by Allergan, has been approved to treat adults with overactive bladders who cannot tolerate or were not helped by other drugs, the Food and Drug Administration said on Friday. Botox injected into the bladder muscle causes the bladder to relax, increasing its storage capacity. “Clinical studies have demonstrated Botox’s ability to significantly reduce the frequency of urinary incontinence,” Dr. Hylton V. Joffe, director of the F.D.A.’s reproductive and urologic products division, said in a statement. “Today’s approval provides an important additional treatment option for patients with overactive bladder, a condition that affects an estimated 33 million men and women in the United States.”

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Boeing Closer to Answer on 787s, but Not to Getting Them Back in Air

Issei Kato/Reuters

Safety inspectors looked over a 787 on Friday in Japan. The plane made an emergency landing after receiving a smoke alarm.

With 787 Dreamliners grounded around the world, Boeing is scrambling to devise a technical fix that would allow the planes to fly again soon, even as investigators in the United States and Japan are trying to figure out what caused the plane’s lithium-ion batteries to overheat.

Ray LaHood, the transportation secretary, made it clear on Friday that a rapid outcome was unlikely, saying that 787s would not be allowed to fly until the authorities were “1,000 percent sure” they were safe.

“Those planes aren’t flying now until we have a chance to examine the batteries,” Mr. LaHood told reporters. “That seems to be where the problem is.”

The Federal Aviation Administration on Wednesday took the rare step of grounding Boeing’s technologically advanced 787s after a plane in Japan made an emergency landing when one of its two lithium-ion batteries set off a smoke alarm in the cockpit. Last week at Boston’s Logan Airport, a battery ignited in a parked 787.

The last time the government grounded an entire fleet of airplanes was in 1979, after the crash of a McDonnell Douglas DC-10.

The grounding comes as the United States is going through a record stretch of safe commercial jet flying: It has been nearly four years since a fatal airline crash, with nearly three billion passengers flying in that period. The last airliner crash, near Buffalo, N.Y., came after a quiet period of two and a half years, which suggests a declining crash rate.

Investigators in Japan said Friday that a possible explanation for the problems with the 787’s batteries was that they were overcharged — a hazard that has long been a concern for lithium-ion batteries. But how that could have happened to a plane that Boeing says has multiple systems to prevent such an event is still unclear.

Given the uncertainty, it will be hard for federal regulators to approve any corrective measures proposed by Boeing. To lift the grounding order, Boeing must demonstrate that any fix it puts in place would prevent similar episodes from happening.

The government’s approach, while prudent, worries industry officials who fear it does not provide a rapid exit for Boeing.

The F.A.A. typically sets a course of corrective action for airlines when it issues a safety directive. But in the case of the 787, the government’s order, called an emergency airworthiness directive, required that Boeing demonstrate that the batteries were safe but did not specify how.

While the government and the plane maker are cooperating, there are few precedents for the situation.

“Everyone wants the airplane back in the air quickly and safely,” said Mark V. Rosenker, a former chairman of the National Transportation Safety Board. “But I don’t believe there will be a corner cut to accomplish that. It will happen when all are confident they have a good solution that will contain a fire or a leak.”

Boeing engineers, Mr. Rosenker said, are working around the clock. “I bet they have cots and food for the engineers who are working on this,” he said. “They have produced a reliable and safe aircraft and as advanced as it is, they don’t want to put airplanes in the air with the problems we have seen.”

The government approved Boeing’s use of lithium-ion batteries to power some of the plane’s systems in 2007, but special conditions were imposed on the plane maker to ensure the batteries would not overheat or ignite. Government inspectors also approved Boeing’s testing plans for the batteries and were present when they were performed.

Even so, after the episode in Boston, the federal agency said it would review the 787’s design and manufacturing with a focus on the electrical systems and batteries. The agency also said it would review the certification process.

The 787 has more electrical systems than previous generations of airplanes. These systems operate hydraulic pumps, de-ice the wings, pressurize the cabin and handle other tasks. The plane also has electric brakes instead of hydraulic ones. To run these systems, the 787 has six generators with a capacity equivalent to the power needed by 400 homes.

Nicola Clark and Christopher Drew contributed reporting.

This article has been revised to reflect the following correction:

Correction: January 19, 2013

An earlier version of this article misstated how regulators responded to small cracks found in the wings of the Airbus A380, and when those cracks were found. Regulators required inspections, followed by fixes, last year, not two years ago; the plane was not grounded.

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Obama aides launch Organizing for Action to back his agenda

WASHINGTON -- Leaders of President Obama's reelection campaign announced Friday that they are launching a permanent advocacy organization called Organizing for Action that will enlist his supporters to fight for his policy agenda.
 
Calling it "the next phase of this movement," former campaign manager Jim Messina described the new group as an extension of Obama's successful bid for a second term, which used technology to engage volunteers at a new level in their communities.
 
"If we can take the enthusiasm and passion that people showed throughout the campaign and channel it into the work ahead of us, we will be unstoppable," Messina, who will be the chairman of the new group, wrote in an email to campaign donors early Friday morning.
 
The launch, which the Los Angeles Times wrote about Thursday, was the subject of chatter among Democratic activists and strategists, who predicted that it could upend the party's power structure.
 
If it is able to sustain the intensive volunteer effort that propelled Obama twice into the White House, Organizing for Action could outstrip the role played by traditional interest groups, such as organized labor and the environmental movement -- and challenge the party itself as a center of influence.
 
To accomplish that, however, the organization must avoid the fate of a similar effort Obama officials made in 2009 to extend his first presidential campaign into a permanent advocacy force. That project, Organizing for America, largely failed to turn grass-roots support into a political force from within its confines at the Democratic National Committee.
 
On Friday, Messina wrote that the new organization would be driven by supporters  and would hew to the campaign's principles: "respect, empower, include."
 
"We'll work on the key battles of our generation, train the next generation of grassroots organizers and leaders, and organize around local issues in our own communities," Messina wrote. "We'll continue to support the President in creating jobs and growing the economy from the middle out, and in fighting for issues like immigration reform, climate change, balanced deficit reduction, and reducing gun violence."
 
The new group is being organized under the tax code’s section 501(c)4 as a nonprofit social welfare organization, which cannot have politics as its primary purpose, limiting its ability to coordinate with the party or candidates.
 
In setting the group up as a 501(c)4, Obama aides chose the same structure as conservative advocacy groups, such as Crossroads GPS and Americans for Prosperity, which the president has lambasted for not disclosing their donors. It remains to be seen whether Organizing for Action will voluntarily reveal information about its financial backers.

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matea.gold@latimes.com

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Become the Ashton Kutcher of Subscription Swag, Before He Does

If you’ve always wanted to create your own monthly subscription box, social commerce startup The Fancy will now do the hard work for you. And here’s the beauty part: They pay you a chunk of every sale.

Starting now, anyone – yes, you – can sign up to make their own Fancy subscription box. You can sign up by e-mailing myfancybox@thefancy.com and once they set you up, you get to pick from a list of popular products on The Fancy, or add anything else you like from the internet, so long as isn’t deemed inappropriate by the startup’s staff (think offensive t-shirts, weapons, or drugs). The Fancy says it is looking for all kinds of people to make boxes, says a company spokesperson. That might seem like a risky business decision, but the company won’t procure any of the products for a box until one sells.

The Fancy will take care of the rest, including packing and shipping the box, and handling the transaction. You’re expected to share your box on Facebook, Twitter, and any other social networks you use to get the word out (and bring more traffic to The Fancy). You keep half the profits from your box sales.

Fancy gained attention last year as not only a Pinterest rival, where you could save images from around the internet, but also as store that actually sold most of the products that others had shared to the site. Instead of finding a cool product on Pinterest and then hunting around to buy it online, you can easily buy that leather bicycle wine rack you fell in love with right from The Fancy. That move to turn pretty pictures into revenue helped The Fancy raise a $26 million round of funding, and spark rumors that Apple was interested in acquiring the company.

In the fall of 2012, the company jumped on the subscription services bandwagon by offering monthly boxes of goodies from the site, picked by the staff. Now its opening that service up to anyone to make their own box.

The first user-created Fancy box hails from actor and investor Ashton Kutcher, who promises to fill his boxes with “the dopest stuff on The Fancy.” Called the A+ box, the box contains $90 worth of stuff and sells for $45. From pictures of the first few A+ boxes, we see mustache bandaids, a bearded beanie, and a (probably faux) Chanel iPhone case.

Since anyone can create a new The Fancy subscription box, we’re secretly hoping a few other Silicon Valley celebrities will sign up as well. There could be the “Best Dressed Tech Billionaire” box, filled with skinny ties and Scott Morrison denim, created by Jack Dorsey, who happens to be an investor in The Fancy; the “Chic Working Mom” box with a mix of stylish kids’ toys and striped tops from Marissa Mayer; and the “Young Fast-Paced CEO” box by Box CEO Aaron Levie, with several pounds of coffee, the latest business read, and ear plugs.

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Peter Chernin wants to build the Marvel of India

NEW YORK (TheWrap.com) – Peter Chernin wants to the build the Marvel Comics of India. CA Media, the Asian investment arm of his Chernin Group, has acquired a large minority stake in Graphic India, an Indian comic book and animation company.

Graphic India, launched in 2012 as a subsidiary of Liquid Comics, is a prominent American comic book company founded by Richard Branson and Deepak Chopra, among others. CA Media and Liquid Comics will now jointly own the company, and Liquid will contribute a substantial comic book library of Indian characters to Graphic India.

CA Media will try to help Graphic India build franchises around those characters, from new print and digital comics to animated shorts.

“Following our successful entry into the traditional media space, we are very pleased that Graphic India marks our first investment in the digital space,” Rajesh Kamat, CEO of CA Media India, said in a statement. Graphic India is a valuable addition to this mix, especially in the youth segment. We look forward to working with the company to create heroes that inspire the next generation of Indian consumers.”

Sharad Devarajan, co-founder of Graphic India, will be CEO of the company and remain executive chairman of Liquid Comics. Under his leadership, the company will launch a series of new projects in the coming year. Graphic India has already partnered with former Marvel chief Stan Lee and POW! Entertainment to create Lee’s first superhero for the Indian market, Chakra the Invincible.

Chakra is born after teenager Raju Rai develops a technology-enhanced suit that unleashes the “mystical chakras of the body.” Lee will collaborate with Indian artists and creators to develop animated clips and comics.

Graphic India will also release new digital content around some of Liquid Comics’ existing properties, such as Shekhar Kapur’s “Devi,” Gotham Chopra’s “The Sadhu” and “Ramayan 3392AD.”

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The Neediest Cases: Medical Bills Crush Brooklyn Man’s Hope of Retiring

Andrea Mohin/The New York Times

John Concepcion and his wife, Maria, in their home in Sheepshead Bay, Brooklyn. They are awaiting even more medical bills.

Retirement was just about a year away, or so John Concepcion thought, when a sudden health crisis put his plans in doubt.

For the past 100 years, The New York Times Neediest Cases Fund has provided direct assistance to children, families and the elderly in New York. To celebrate the 101st campaign, an article will appear daily through Jan. 25. Each profile will illustrate the difference that even a modest amount of money can make in easing the struggles of the poor.

Last year donors contributed $7,003,854, which was distributed to those in need through seven New York charities.

2012-13 Campaign

Previously recorded:

$6,865,501

Recorded Wed.:

16,711

*Total:

$6,882,212

Last year to date:

$6,118,740

*Includes $1,511,814 contributed to the Hurricane Sandy relief efforts.

“I get paralyzed, I can’t breathe,” he said of the muscle spasms he now has regularly. “It feels like something’s going to bust out of me.”

Severe abdominal pain is not the only, or even the worst, reminder of the major surgery Mr. Concepcion, 62, of Sheepshead Bay, Brooklyn, underwent in June. He and his wife of 36 years, Maria, are now faced with medical bills that are so high, Ms. Concepcion said she felt faint when she saw them.

Mr. Concepcion, who is superintendent of the apartment building where he lives, began having back pain last January that doctors first believed was the result of gallstones. In March, an endoscopy showed that tumors had grown throughout his digestive system. The tumors were not malignant, but an operation was required to remove them, and surgeons had to essentially reroute Mr. Concepcion’s entire digestive tract. They removed his gall bladder, as well as parts of his pancreas, bile ducts, intestines and stomach, he said.

The operation was a success, but then came the bills.

“I told my friend: are you aware that if you have a major operation, you’re going to lose your house?” Ms. Concepcion said.

The couple has since received doctors’ bills of more than $250,000, which does not include the cost of his seven-day stay at Beth Israel Medical Center in Manhattan. Mr. Concepcion has worked in the apartment building since 1993 and has been insured through his union.

The couple are in an anxious holding pattern as they wait to find out just what, depending on their policy’s limits, will be covered. Even with financial assistance from Beth Israel, which approved a 70 percent discount for the Concepcions on the hospital charges, the couple has no idea how the doctors’ and surgical fees will be covered.

“My son said, boy he saved your life, Dad, but look at the bill he sent to you,” Ms.  Concepcion said in reference to the surgeon’s statements. “You’ll be dead before you pay it off.”

When the Concepcions first acquired their insurance, they were in good health, but now both have serious medical issues — Ms. Concepcion, 54, has emphysema and chronic obstructive pulmonary disease, and Mr. Concepcion has diabetes. They now spend close to $800 a month on prescriptions.

Mr. Concepcion, the family’s primary wage earner, makes $866 a week at his job. The couple had planned for Mr. Concepcion to retire sometime this year, begin collecting a pension and, after getting their finances in order, leave the superintendent’s apartment, as required by the landlord, and try to find a new home. “That’s all out of the question now,” Ms. Concepcion said. Mr. Concepcion said he now planned to continue working indefinitely.

Ms. Concepcion has organized every bill and medical statement into bulging folders, and said she had spent hours on the phone trying to negotiate with providers. She is still awaiting the rest of the bills.

On one of those bills, Ms. Concepcion said, she spotted a telephone number for people seeking help with medical costs. The number was for Community Health Advocates, a health insurance consumer assistance program and a unit of Community Service Society, one of the organizations supported by The New York Times Neediest Cases Fund. The society drew $2,120 from the fund so the Concepcions could pay some of their medical bills, and the health advocates helped them obtain the discount from the hospital.

Neither one knows what the next step will be, however, and the stress has been eating at them.

“How do we get out of this?” Mr. Concepcion asked. “There is no way out. Here I am trying to save to retire. They’re going to put me in the street.”

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Fed Transcripts Open a Window on 2007 Crisis

WASHINGTON – Federal Reserve officials in August 2007 remained skeptical that housing foreclosures could cause a financial crisis, just days before the Fed was jolted into action, according to transcripts that the central bank published Friday.

Worries about the health of financial markets dominated a meeting of the Fed’s policy-making committee on Aug. 7, but they decided there was not yet sufficient evidence that the problems were affecting the growth of the broader economy.

Just three days later, the Fed’s chairman, Ben S. Bernanke, convened an early-morning conference call to inform them that the central bank had been forced to start pumping money into a financial system that was suddenly seizing up. More than five years later, the system remains heavily dependent on those pumps.

“The market is not operating in a normal way,” Mr. Bernanke said on that August call, in a moment of historic understatement. “It’s a question of market functioning, not a question of bailing anybody out. That’s really where we are right now.”

August 2007 was the month that the Fed began its long transformation from somnolence to activism. Mr. Bernanke and his colleagues would continue to wrestle with misgivings about the extent of the Fed’s powers, and about the limits of appropriate action. At times they would hesitate or move slowly. At times they even would reverse course, most importantly in standing by as Lehman Brothers collapsed the following year. But it is now widely accepted that their efforts helped to arrest the economic chaos unleashed by the financial crisis.

Some of what followed might have been predicted by close readers of Mr. Bernanke’s work as an academic. He had long argued that the great lesson of the Great Depression was that a central bank should never allow its financial system to run short of money. Even more than its efforts to reduce borrowing costs, the Fed’s policy over the coming years would be defined by its determination to provide the funding private investors were withholding.

But in the face of an unprecedented crisis, Mr. Bernanke also would set aside his own work. He had long argued that the Fed should strive to respond to economic circumstances as transparently and predictably as possible, a break from the intuitive and unpredictable style of his predecessor, Alan Greenspan.

By the end of 2007, even as the available economic data remained fairly strong, Mr. Bernanke and his colleagues instead concluded that they could see the future, that they did not like what they saw, and that it was time to act.

“Intuition suggests that stronger action by the central bank may be warranted to prevent particularly costly outcomes,” Mr. Bernanke said in an October 2007 speech that marked the beginning of his public embrace of the need for pre-emptive action.

The Fed’s most dramatic steps did not begin until December 2007, when it created the Term Auction Facility, the first in a series of new programs intended to pump money into the financial system, and arranged to pump dollars into the European financial system in partnership with the European Central Bank.

And by January 2008, the Fed’s response to the crisis was in full swing.

The Fed began 2007 still deeply immersed in complacent disregard for problems in the housing market. Fed officials knew that people were losing their homes. They knew that subprime lenders were blinking out of business with every passing week. But they did not understand the implications for the broader economy.

”The impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained,” Mr. Bernanke said in March.

The mortgage industry was imploding by the time the Fed’s policy-making committee met on Aug. 7. American Home Mortgage, a leading subprime lender, had filed for bankruptcy the previous day. One week earlier, the investment bank Bear Stearns had liquidated a pair of mortgage-focused hedge funds. But officials did not cut interest rates. The economy, they said, “seems likely to continue to expand.” The statement did not even mention the housing market.

The transcripts show that many Fed officials at the August meeting remained deeply skeptical about the likely economic impact of those problems.

“My own bet is the financial market upset is not going to change fundamentally what’s going on in the real economy,” William Poole, president of the Federal Reserve Bank of St. Louis, told the committee on Aug. 7.

That was a Tuesday. The image of calm would last exactly two more days. By Thursday morning, the European Central Bank was offering emergency loans to continental banks and the Fed was following suit. And Mr. Poole and his board voted that day to ask for the Fed to reduce the interest rate on such loans, becoming the first official arm of the central bank to push for stronger action.

Two weeks later, at 6 p.m. on a Thursday, Fed officials dialed in to an emergency conference call where they agreed to adopt the St. Louis Fed’s proposal.

The central bank began to make it easier for cash-strapped financial companies to borrow money, an effort that would expand dramatically over the coming years as the crisis intensified and private investors withdrew funding.

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