Fed Forced to Come to the Rescue...Again

The Fed set a historic precedent this weekend by opening the discount window, normally only available to banks, to securities dealers. This allows securities firms to borrow money directly from the Federal Reserve in order to help ease liquidity problems.

It looks like an ugly day on Wall Street today and the big question is whether fear forces another institution into crisis. Many Wall Street firms, including Lehman Brothers, Goldman Sachs and Merrill Lynch, announce their quarterly earnings this week - they would do well to "inadvertently" announce them mid-afternoon today, lest fears of bankruptcies become self-fulfilling.

Meanwhile, the European Central Bank, feeling insulated from U.S. economic woes, seems oblivious to the entire situation, enjoying the bask of a strong Euro. (I really don't think they will feel so insulated if major banks begin failing.)