Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

24 of 33
Tuesday, Oct. 7 - New kind of bailout
Tuesday, Oct. 7 - New kind of bailout
In yet another move to encourage lending between companies, the Fed announced a new program Tuesday that would help businesses by buying up their short term debt, also known as commercial paper.

The short-term lending market had frozen, and companies began to worry that they would not be able to get the loans necessary to pay their bills or make payroll. The Fed stepped in hoping to restore confidence to a corporate borrowing market that had shrunk by 11% in three weeks.

But the news didn't do much to unfreeze the credit markets. Several key measures only eased very slightly, while the yield on the 3-month Treasury momentarily jumped above 1% for the first time in two weeks.

In a speech that day before the National Association of Business Economics in Washington, Fed chief Ben Bernanke said the economic outlook had worsened, and the financial crisis will hurt the economy well into next year. He also implied that more interest-rate cuts were on the way.

Later, the Fed reported that borrowing by consumers fell in August for the first time in more than 10 years, as budgets tightened and credit became scarcer.

Investors didn't like what they heard, and stocks fell to five-year lows. The Dow tanked another 500 points.

NEXT: Wednesday, Oct. 8 - Global coordination
Last updated September 14 2009: 2:19 PM ET
Email | Print | Share  |  RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
More Galleries
Millennials are shaking up these 7 industries Nearly half of Millennials plan to start their own business within the next three years, according to a recent survey. More
How to enjoy Paris like a local Leave the tourist trail behind and enjoy wine, gastronomy, perfume, art, dance like a Parisian. More
Playboy founder Hugh Hefner through the years Cultural icon Hugh Hefner pushed barriers with his controversial Playboy magazine. He died at the age of 91. More

Special Offer