AFTER THE ATTACKS: THE ECONOMY; NATION SHIFTS ITS FOCUS TO WALL STREET AS A MAJOR TEST OF ATTACK'S AFTERMATHS, by Richard W. Stevenson with Jonathan Fuerbringer, New York Times, September 17, 2001

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Returning to the White House from Camp David this afternoon, President Bush said ''no question about it, this incident affected our economy.'' But he also expressed ''great faith'' in the nation's economic and financial resiliency.

''The markets open tomorrow, people go back to work, and we'll show the world,'' Mr. Bush said.

The Federal Reserve and its counterparts in Europe and Japan chose not to take any action in advance of Wall Street's attempt to return to normal after the devastation of Tuesday. Japanese stocks fell sharply in trading on Monday. [Page C6.]

But with much riding on the stock market's opening, both psychologically and financially, officials from the administration, the Fed and the Securities and Exchange Commission mounted a campaign to bolster investor and consumer confidence and win cooperation from top executives of the nation's major banking and investment companies.

They made clear that the government expected the industry to put the need for a smooth opening in the stock market ahead of short-term trading strategies or other business decisions that might drive down share prices down.

William J. McDonough, president of the Federal Reserve Bank of New York, said he had spoken in the last few days to financial executives, including William B. Harrison Jr., president of J. P. Morgan Chase; Philip J. Purcell, chairman of Morgan Stanley Dean Witter; John J. Mack, chief executive of Credit Suisse First Boston; and David H. Komansky, chairman of Merrill Lynch.

Mr. McDonough said in an interview today that his message to the banking and investment industries was that ''the whole financial sector realize that tomorrow is a challenge and that it is important that we do well tomorrow.''

He told them, he said, that ''they should be taking care of all the needs of their customers and counterparties and should be making wise credit decisions.''

At the same time, everyone from Vice President Dick Cheney to commentators and ministers in the pulpit sought to turn helping the market restart into something of a patriotic crusade, and maybe even good business.

Warren E. Buffett, one of the nation's best-known investors; Robert E. Rubin, a former Treasury secretary; and John F. Welch Jr. the recently retired chairman of General Electric, all went on the CBS News program ''60 Minutes'' tonight to instill confidence.

Mr. Buffett said he ''won't be selling anything'' when the market opens, and that if prices fell enough, ''there's some things I might buy.''

The Fed declined to comment on the schedule of its chairman, Alan Greenspan. But underscoring the focus that policy makers have put on having the stock market operating again as a step toward re-establishing economic normalcy, Treasury Secretary Paul H. O'Neill left Washington today after a National Security Council meeting and traveled to New York, where he planned to be on the floor of the New York Stock Exchange when it reopens at 9:30 Monday morning.

The economy in the United States appeared to be on the brink of recession even before the attacks on the World Trade Center and the Pentagon. Many economists said the blow to consumer and investor confidence and the slowdown in economic activity caused by the disruptions to air travel and ordinary commerce were likely to push it over the edge.

With the global economy also decelerating, economists have been particularly concerned that a sharp and sustained fall in stocks in the United States and abroad could set off a crisis that would make the overall outlook even dimmer.

There were rumors throughout the day -- driven as much by hope among investors as by concrete evidence -- that the Federal Reserve might cut interest rates the next few days, perhaps in conjunction with the central banks in Japan and Europe. Rate cuts tend to provide the markets with a psychological lift and to encourage investors to move money from bonds into stocks.

Mr. Cheney said the nation ''quite possibly'' faces war and recession simultaneously. But he said the economy should rebound quickly, and he suggested that individuals could help by continuing to work, spend and invest as normally as possible.

Speaking on ''Meet the Press'' on NBC News, Mr. Cheney said he hoped that ''the American people would, in effect, stick their thumb in the eye of the terrorists and say that they've got great confidence in the country, great confidence in our economy and not let what's happened here in any way throw off their normal level of economic activity.''

The S.E.C. said last week that it would waive certain regulations to allow companies and executives to help prop up the prices of their shares. Other government officials said they had sent word to investment firms that they would frown on practices that might contribute to volatility in the markets, including short-selling, or betting that a stock will lose value.

A senior financial regulator said over the weekend that the S.E.C. had concluded that it would be inappropriate for the commission to tell the investment firms it regulates what to do when the market reopens. But the official said the commission was heartened by the spread of calls for people to buy stock on Monday, or at least to avoid selling.

Ignited by newspaper columns and Web sites, there has been widespread talk of fighting back by putting or keeping money in the stock market come Monday.

Bruce Bartlett, a conservative economist and commentator, wrote in The New York Post on Saturday that individuals should ''vote for America by putting your money into its financial and industrial core.'' At All Souls Unitarian Church on the Upper East Side of Manhattan today, the minister, Galen Guengerich, told the congregation: ''Buy a new book. Buy some stocks.''

After a long pause he added, ''Tomorrow morning,'' eliciting a wave of applause and laughter.

As it confronts the likelihood of a costly war against terrorism and a period of economic peril, the United States can draw on its bequest from the prosperity of recent years, including a substantial federal budget surplus and the ability to slash interest rates.

Economists said that after more than 10 years of uninterrupted economic growth -- the longest expansion on record -- the nation had the resources to pay for military action, reconstruction and a dose of stimulus to the economy without taking on levels of debt that would be troublesome in the short run.

With inflation low, the Fed has the flexibility to give the economy and the markets an immediate boost by reducing interest rates further, even after seven rate cuts this year.

Having been squeezed for two decades by intense global competition, American industry is generally lean and nimble, and the banking system is healthy.

''We have a surplus in our budget and room to do near-term stimulus,'' said Alice M. Rivlin, a former vice chairwoman of the Federal Reserve who also directed the Congressional Budget Office.

''We have a strong banking system that's coming off a long period of doing very well,'' she said. ''And we have monetary policy that's been aggressive but still has a lot of maneuvering room. We have a very resilient economy.''

Given all the uncertainties about military action and critical economic factors like oil prices, the outlook at this point is foggy. But economists said they expected at least a quarter or two in which the economy would be weaker than it looked as if it would be before Tuesday.

''Coming as this shock does, amid an economy that was already in demonstrable retreat, the result will surely be to accelerate the pace of economic decline,'' said Robert J. Barbera, chief economist at Hoenig & Company, an investment firm.

Copyright 2005 The New York Times Company

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Anticipating a ban, the builders stopped using the materials by the time they reached the 40th floor of the north tower, the first one to go up.

Now some engineers and scientists -- including at least one whose research supported an asbestos ban in New York City -- are haunted by a troubling question: were the substitute materials as effective in protecting against fire as the asbestos-containing materials they replaced?

Asbestos, a fibrous, silicate mineral, was highly prized as a fireproofing component because of its high melting point and its resistance to chemical breakdown. It also conducts little heat and its fibers create strong, supple materials.

The question haunts those engineers and scientists, but not because they think asbestos insulation might have ultimately preserved the towers' steel beams and trusses, which buckled in Tuesday's infernos, causing the towers to collapse.

Virtually as one, experts on the development, testing and use of fireproofing materials say no standard treatment of the steel, asbestos or otherwise, could have averted the collapse of the towers in the extraordinarily hot and violent blaze.

But some wonder whether asbestos insulation might have kept the towers intact long enough for more people to have escaped. And more important, they say the disaster at the World Trade Center exposes a gap in their knowledge about many fireproofing materials.

While those materials are routinely tested under conditions typical of ordinary fires, their effectiveness at the much higher temperatures of last week's catastrophe is generally unknown. In the new world of domestic terrorism, some authorities say ignorance is no longer acceptable.

''Tests for very violent and very large-scale fires have not been done,'' said Dr. Yogesh Jaluria, a professor of mechanical and aerospace engineering at Rutgers.

Dr. Jaluria, who added that similar questions surrounded the widespread fires in Kuwait in the Persian Gulf war in 1991, said he was all but certain that asbestos would have made no difference in the attack on the towers. But he said that definitive data do not exist.

While no one believes that fireproofing or other technology is a substitute for preventing terrorism, some scientists say building designs and materials should be subjected to much more detailed analysis.

''The technology exists today to do a full-scale computer analysis of what would happen under these conditions that we saw on television,'' said Dr. R. Brady Williamson, an emeritus professor of engineering science at the University of California at Berkeley.

Before the trade towers are rebuilt -- as some suggest they should be -- such studies should be used to design buildings able to ''withstand this scenario,'' Dr. Williamson said.

Guy F. Tozzoli, who as director of the world trade department for the Port Authority of New York and New Jersey from 1962 until 1987 was a prime mover of the twin towers project, said they were designed to survive being struck by a Boeing 707, the largest jet of the day. The studies envisioned a low-speed impact by a plane lost in fog, he said.

And, initially at least, each tower did survive the high-speed impact of a larger jet, a Boeing 767.

When it came to fireproofing, the Port Authority at first turned to a mixture containing about 20 percent asbestos that was sprayed onto steel beams, where it dried and formed an insulating layer intended to keep the temperature of the steel from rising above 1,100 degrees Fahrenheit.

''Steel loses about 50 percent of its strength at that temperature,'' and can begin to buckle under the load of a building, said Robert Berhinig, a section head in fire-resistive construction at Underwriters Laboratories in Northbrook, Ill., where such materials are tested.

The fireproofing material was manufactured by United States Mineral Products of Stanhope, N.J., under the trade name Blaze-Shield, said James Verhalen, who was then president of the company and is now its chairman. About 65 percent was ''mineral wool'' -- essentially rock that was melted and spun into fibers -- bound together by cementlike components.

But as the steel skeleton of the towers began to rise, cancer studies by Dr. Irving J. Selikoff, then director of the environmental sciences laboratory at the Mount Sinai School of Medicine, were signaling the beginning of the end for asbestos.

Tests that showed asbestos from construction sites was being blown into the air sealed its fate. In 1969, Mr. Tozzoli said, the Port Authority decided to switch to a substitute fireproofing not containing asbestos; the city banned the substance in construction in 1971. The project again turned to United States Mineral, which had developed a new product -- also called Blaze-Shield -- with the asbestos removed. In addition, more than half of the original, asbestos-containing material was later replaced, said Allen Morrison, a spokesman for the Port Authority.

Mr. Verhalen said the new product essentially contained more mineral wool and binders, but no asbestos.

''The fire tests at Underwriters Laboratories produced the same fire resistance as the asbestos-containing products,'' Mr. Verhalen said. Port Authority had the same results. ''We tested the hell out of it,'' said Mr. Tozzoli, who saw the second jet collision from the toll plaza on the New Jersey side of the Holland Tunnel. The lack of asbestos fireproofing, he said, ''had nothing to do with the collapse of the building.''

But partly because the substitute materials have been tested largely at temperatures characteristic of ordinary office fires -- involving paper and furniture -- and not in such a cataclysm, others have their doubts.

''In retrospect, considering the recent events at the World Trade Center, I wonder if the performance characteristics of the replacement material were as good,'' said Dr. Arthur Langer, director of the environmental sciences laboratory at Brooklyn College.

Dr. Langer, whose measurements of asbestos in the air were important in Dr. Selikoff's work but who has since received financing from the asbestos industry for his own research, concedes that the answer may never be known. Although he still believes that the decision to change the materials was ''a good one based on concerns over public health,'' Dr. Langer says the question of effectiveness against fire still haunts him.

Whatever their stance on that question, others suggest that the disaster may change the way building materials are chosen in the future.

The fire-protecting performance of asbestos compared with that of other materials is ''a legitimate question,'' said Dr. Philip J. Landrigan, who succeeded Dr. Selikoff at Mount Sinai. (Dr. Selikoff died in 1992.) But Dr. Landrigan, a medical doctor whose formal title is chairman of the department of community and preventive medicine, said he was satisfied with research showing that the replacements were as good as those containing asbestos. And he said Dr. Selikoff's work had suggested that hundreds of thousands of people had died of cancer because of exposure to asbestos.

''The toll from asbestos has been truly massive,'' Dr. Landrigan said. ''The difference, of course, is that it occurred one at a time.''

Photo: Early in the trade centers' construction, builders abandoned asbestos as a fireproofing material. Now some scientists wonder about the decision. (The New York Times)

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There could be a slight health threat, they said, to city residents with weakened immune systems, heart disease or asthma, and to rescue workers who did not wear protective gear or who smoke. Smoking greatly amplifies the effects of some kinds of pollution, scientists said.

But over all, the danger was no greater than that on a smoggy day, some officials said.

Some government scientists, speaking only on the condition of anonymity, said they were concerned that city health officials had not done more to encourage those people who were caked in the dust as the disaster unfolded to avoid spreading it around once they were safe at home.

But tests of air and the dust coating parts of Lower Manhattan appeared to support the official view expressed by city, state and federal health and environmental officials: that health problems from pollution would not be one of the legacies of the attacks. Tests of air samples taken downwind of the smoldering rubble on Tuesday and Wednesday -- mainly in Brooklyn -- disclosed no harmful levels of asbestos, lead or toxic organic compounds, officials of the federal Environmental Protection Agency said yesterday.

Some samples of the dust that cloaked the disaster scene, victims and rescuers on Tuesday showed slightly elevated levels of lead and asbestos, the agency said. But by Wednesday, levels of the substances had dropped below the threshold of any concern, said Bonnie Bellow, a spokeswoman for the Environmental Protection Agency. Tests on samples taken yesterday would not be completed until today, she said.

Continued monitoring of fine soot particles and other kinds of air contaminants by state environmental officials also showed ''nothing out of the ordinary,'' a state official said.

''We're not seeing any violations,'' the official said, ''not seeing anything out of the ordinary, with the exception of small episodic spikes based on wind shifts or activity at ground zero.''

The best approach for people near the attack site, experts said, would be to limit their exposure to smoke and dust as much as possible, by using filtering masks and washing coated clothing in separate loads from other laundry.

''There's a lot of debris and various kinds of dust,'' Ms. Bellow said. ''The best advice for workers is to wear the proper protection.''

Federal and city health officials said they had a stockpile of 10,000 paper-filter masks, 5,000 more-sophisticated masks able to filter the tiniest particles, and 2,000 sets of goggles on hand for rescuers to wear.

At St. Mary's Hospital in Crown Heights, Brooklyn, which treated many victims of the attack who fled across the Brooklyn Bridge, there was no sign of a spike in respiratory illness, said Ernst J. Baptiste, the hospital's executive director.

The situation was similar at Bellevue Hospital Center, which treated dozens of injuries. Hospital officials said only a small number of people walked in complaining of breathing troubles.

The first volcano-like clouds of dust and smoke from the fires and building collapses undoubtedly contained potentially harmful particles and gases, which have since dissipated, said Dr. Mark D. Siegel, the director of the medical intensive care unit at Yale-New Haven Hospital.

The most visible ingredient, though -- the large particles of dust and ash -- was probably the least dangerous, he said.

The lungs, throat and nasal passages are designed to eject large particles, like the heavy ash that coated Lower Manhattan and fell on many fleeing people, he said. But gases and the finest particles can penetrate deep in the lungs and remain behind even after extensive fits of coughing.

Generally, the biggest risk posed by those substances would be to people who have a heightened sensitivity to chemicals, Dr. Siegel said. He said that one of the lowest risks would be from inhaling asbestos fibers, if any were released when the towers fell.