Fed Acknowledges That Things ‘Have Been Better’

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The Federal Reserve--not particularly beside itself over being two hours late to the disaster relief station—said this morning that in light of certain issues that market is experiencing, it will provide enough liquidity to “keep financial markets operating normally.” (Yes, “keep,” because apparently everything’s been going smoothly, as far as Bernanke, et. al., can see). The bank will inject reserves on an as-needed basis through open market operations to promote trading close to its target rate of 5.25%. The Beard of Understanding also noted that, "In current circumstances, depository institutions may experience unusual funding needs because of dislocations in money and credit markets." I don’t know about you, but here at DealBreaker we're all moist with excitement (probably due to the liquidity) and can't wait to see how the FEMA-approach will pan out in the capital markets.
Update: the Fed seems to be—at least superficially—less ineffective than FEMA.

After the $19 billion injection, the rate fell back toward the target. Later in the morning, the Fed accepted another $16 billion in repurchase agreements.
The Fed's injection operation "had an immediate calming impact," said Lou Crandall, chief economist at Wrightson Associates, the research arm of money market broker ICAP. "The market wanted to see some indication the fed recognizes the problem and would be supportive."

Fed Issues Statement as It Moves To Reassure Jittery Markets [WSJ]

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