The Fed left its policy unchanged at that meeting. That was a Tuesday, and over the next few days, stocks plunged as more financial institutions reported problems related to bad loans.

On Friday, the Fed held an unscheduled conference call and decided to inject $38 billion into the U.S. banking system.

Less than a week later, it held another emergency conference call and decided to cut the discount rate -- the rate it charges qualified lenders, mainly banks, for temporary loans.

September 2007: The rate cuts begin

The central bank meets and starts cutting the federal funds rate, the key interest rate that impacts everything from mortgages to car loans to credit cards. But the Fed still errs on the side of caution, as some officials warn that they could be overestimating the severity of the downturn.

"As the central bank we have a responsibility to help markets function normally and to promote economic stability broadly speaking," Bernanke said. "We are not in the business of bailing out individuals or businesses."

Fed officials meet two more times and hold another unscheduled conference call. By the end of the year, the federal funds rate is down to 4.25%.

At the last meeting of the year, Yellen said this prophetic words:

"I believe that the most likely outcome is for the economy to slow significantly in the near-term, flirting with recession," she said.

Little did they know then, the recession had only just begun.