Alan Greenspan had barely settled into his role as Fed Chair when markets turned savage.

On October 19, 1987, known starkly as Black Monday, the Dow Jones Industrial Average cratered almost 23% in a single day. According to Yahoo Finance, this remains the worst one-day percentage drop in its history. Panic rippled across global markets, but the new Fed chair's response would define the next two decades and beyond.

Greenspan, who died Monday at his Washington home at age 100, moved fast after the stocks crashed. Before markets opened the next morning, the Fed issued a single sentence pledging to keep the financial system liquid, then flooded it with cash and pushed its benchmark interest rate down from about 7.3% to 6.5% over the following months. This decisive action by Greenspan was not only effective in halting the financial spiral but also played a critical role in stabilizing investor confidence. Within a couple of years, the crash looked on a long-term chart like little more than a blip.

Greenspan's swift rescue of the markets earned him early credibility and set the standard for how he handled turmoil for the rest of his tenure. When Wall Street wobbled in 1998, and again after the dot-com bubble burst, investors came to expect the same move: the Fed riding in to cushion the fall. Traders gave the pattern a name, the "Greenspan put," borrowing from the options contract that limits an investor's losses. This approach established a precedent of central bank intervention during times of crisis, shaping the expectations of financial markets.

The assumption that the central bank will backstop markets in a crisis still shapes how Wall Street takes risks today. This policy expectation bolstered market confidence, providing a perceived safety net that encouraged investors to take risks that they might otherwise have avoided. However, this approach was not without its critics. Some argued that the very same instinct, rushing to soften every downturn with cheap money, encouraged the reckless betting that helped inflate the 2008 housing bubble.

Despite these criticisms, in the immediate aftermath of 1987, praise for the rookie chairman was nearly unanimous. His quick decision-making and clear communication with financial markets provided a template for future central bank actions. This not only bolstered his credibility but also reinforced the importance of swift, decisive action in the face of economic turbulence.

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Across five terms under four presidents, the second-longest tenure in Fed history, Greenspan presided over the longest economic expansion the country had ever seen, from 1991 to 2001. This period of sustained growth earned him the nickname "the Maestro," as he adeptly navigated the complexities of global finance. His strategies were largely credited with promoting economic stability and growth, showcasing his ability to adapt to changing economic landscapes.

President George W. Bush awarded him the Presidential Medal of Freedom in 2005, and Queen Elizabeth II granted him an honorary knighthood in 2002 for his contribution to global economic stability. These honors reflected the international recognition of his efforts to maintain economic equilibrium and the respect he garnered from global leaders.

Greenspan's legacy is multifaceted. He is credited with pioneering a new era of proactive central banking, where the Fed took a more active role in guiding the economy. This approach involved a mix of traditional monetary policy tools, such as interest rate adjustments, and unconventional measures aimed at stabilizing markets during periods of uncertainty. His leadership style emphasized the importance of adaptability and responsiveness in policy-making, ensuring that the Fed remained attuned to the ever-evolving dynamics of global finance.

While his policies were not without controversy, particularly regarding their role in subsequent financial crises, Greenspan's contributions to economic thought and policy cannot be overstated. His tenure at the Fed set a precedent for future chairs, influencing how they approach economic challenges and manage market expectations.

Greenspan passed away at 100 on a recent Monday in Washington, but his influence on financial systems remains profound. His early actions amid chaos helped shape not just his legacy but also the contours of modern financial risk management. His career serves as a testament to the enduring impact of decisive leadership in times of crisis, providing valuable lessons for current and future economic policymakers.