There is some other less reported but important action that the Federal Reserve has taken. If you will review the quote below from the book Conquer the Crash, you will see that banks are generally reluctant to utilize the Fed’s “open window” but that is exactly what the Fed is encouraging.

“Discount Window
Today’s action also includes an extension in so-called discount window borrowing, allowing 30-day financing that’s renewable, instead of a standard overnight loan. The Fed’s board sets the discount rate while the FOMC, which includes the governors and heads of five of the 12 district banks, determines the federal funds target rate.

The Fed loosened terms on discount-window borrowing after its injections of cash into the federal-funds market in the past week failed to ease companies’ access to capital. While there were enough funds in the system even to drive the effective federal funds rate below the 5.25 percent, credit in other markets was scarce.

The amount of commercial paper outstanding, a key financing tool, fell the most in the week to Aug. 15 since the 2001 terror attacks. Countrywide Financial Corp., the biggest U.S. mortgage lender, tapped an entire $11.5 billion bank line yesterday to get funds.”

Here is a link to the entire article:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aJv5U5SQq6BU&refer=worldwide

Mike