The shadow bailout

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On Tuesday, the US Federal Reserve announced it was bypassing the middleman and going straight to corporate America. Its commercial paper funding facility is highly unorthodox – direct lending by the central bank to non-bank borrowers – but it is the right thing to do. The $1,600bn market, which companies use to manage their working capital needs, has almost ceased to function.

A lot of attention was paid to the $700 billion bailout package over the past few weeks, but it is the Fed's technical, less-heralded moves that may mean the difference between financial life and death for many banks and other firms in the days ahead.

I just hope Ben Bernanke has enough Maalox on hand.