April 27 (Bloomberg) -- A White House official apologized for sending an Air Force One backup plane swooping over New York Harbor for a photo shoot that frightened Wall Street workers and evoked fears of another terrorist attack.

The director of the White House Military Office, Louis Caldera, said he had approved today’s flight and would take responsibility for “any distress” it caused. While federal officials “took the proper steps to notify state and local authorities in New York and New Jersey, it’s clear that the mission created confusion and disruption,” he said.

“I thought, ‘Oh, hell,’ that it was 9/11 all over again,” said Kate Geraghty, a Verizon Communications Inc. sales executive who saw the airplane from Jersey City, New Jersey, across the Hudson River from Manhattan. “I thought, ‘Oh my God, this plane is going to crash.’”

New York Mayor Michael Bloomberg said he was “furious” when he learned from a message on his mobile device about the flight, which was planned to photograph the plane near the Statue of Liberty. The plane flew as low as 1,000 feet (305 meters), the mayor said at a City Hall press conference.

“Why the Defense Department wanted to do a photo op right around the site of the World Trade Center catastrophe defies imagination,” Bloomberg said.

Obama’s Fury

An administration official characterized President Barack Obama as also being furious when he heard about the incident and the confusion it caused. The president hasn’t publicly addressed the matter. There are no plans to ask for Caldera’s resignation, according to the official, who spoke only on condition of anonymity.

Caldera, 53, a lawyer, was secretary of the Army during the administration of former President Bill Clinton and previously was a state legislator in California. He also has served as a director of companies including Southwest Airlines Co. and IndyMac Bancorp Inc., which collapsed last year and was seized by the government.

The New York City Police Department said it was told by the Federal Aviation Administration not to inform the public about what it thought would be a higher flyover by two F-16s and an Air Force VC-25 aircraft, said Paul Browne, the deputy police commissioner. The VC-25, a military version of Boeing Co.’s B- 747, is used as Air Force One when the president flies on it, a Pentagon spokeswoman said.

The 30-minute sortie, from about 10 a.m. to 10:30 a.m., was a “normally scheduled training mission” coordinated with the White House and the New York office of the FAA, Air Force spokeswoman Vicki Stein said from the Pentagon.

‘Photo Mission’

The planes were on a “photo mission,” Jim Peters, an FAA spokesman, said in an interview. They flew over the harbor near the site of the Sept. 11, 2001, attacks on the World Trade Center.

Stocks fell in New York trading after the plane was sighted at about 10 a.m. The Standard & Poor’s 500 Index lost about 0.7 percent in 10 minutes, then recouped all of the loss by 10:20 a.m.

New York police assumed the mission would be at a higher altitude, Browne said in an interview.

“They said it was flying over the Statue of Liberty,” Browne said. “We presumed it was going to be an elevation that would cause no concern.”

Low Flight

Witnesses reported the plane appeared to be flying below the level of some office towers along the river.

Kevin Farmer said he was in his office on the 23rd floor of a Jersey City tower when he saw the plane pass his window twice. Fellow workers rushed for the stairwell even as the building fire marshal said over the public-address system that the airplane posed no danger.

“Everyone ignored him,” Farmer said. “9/11 was fresh in everyone’s memory.”

The plane just cleared the buildings near the Jersey City Medical Center and shook the hospital’s windows as it passed overhead, said Mark Rabson, a hospital spokesman.

“The people who lived through 9/11 went downstairs,” said Rabson, who was in a meeting there at the time.

The hospital sent ambulances to the Jersey City waterfront after receiving numerous calls. No one was taken to the hospital, although people were treated at the scene for some minor injuries, he said.

‘A Lot of Panic’

The ambulance crews reported back to the hospital “that there was a lot of panic,” Rabson said. “We watched it go by once and then twice and then three times; it was very scary.”

At the Jersey City office of Goldman Sachs Group Inc., some workers fled the building, though there was no official evacuation, a spokeswoman said.

Some employees fled their offices at American Express Co.’s headquarters in the World Financial Center, a block from the site of the World Trade Center, spokeswoman Leslie Berland said. The company wasn’t aware of the planned fly-over before it happened, she said in an e-mail message.

The New York City Office of Emergency Management said the planes were part of an “approved federal activity,” Chris Gilbride, a spokesman, said. He said he didn’t know which city agencies had been informed of the event beforehand.

The North American Air Defense Command and the U.S. military’s Northern Command said they couldn’t answer questions and referred calls to the FAA.

The mayor is the majority owner of Bloomberg LP, the parent company of Bloomberg News.

To contact the reporters on this story: Peter S. Green in New York at psgreen@bloomberg.net; Kim Chipman in Washington at kchipman@bloomberg.net

Last Updated: April 27, 2009 19:47 EDT