Financial crisis even more desperate than first thought

Turns out that during the worst of the crisis the Federal Reserve had to help out not just the big banks, but GE, McDonald's, Verizon, Caterpillar and other corporations. Newly released Fed documents show just how reliant these companies had become on the central bank to finance their day-to-day operations. Even the most creditworthy customers, such as the names listed above, could not find a market for commercial paper, the short-term i.o.u.'s that corporations depend on to make payroll and pay their suppliers. From the WSJ:

When financial markets deteriorated after the collapse of Bear Stearns Cos., the Fed created the Primary Dealer Credit Facility, which provided overnight loans to investment banks, a privilege previously reserved for more tightly regulated commercial banks. In addition to providing banks with overnight loans, the Fed, through its Term Securities Lending Facility, agreed to lend as much $200 billion in Treasury securities to investment banks for longer, 28-day periods.

The Fed documents might tamp down the mythology about how the government overreacted to Wall Street's financial meltdown and why federal intervention wasn't necessary. It's nonsense, of course, but people will believe what they want to believe at this late date, facts be damned.