would cheaper money relieve the anxiety in financial markets about shoddy mortgages and declining home prices?
Even as the chairman of the Federal Reserve vowed on Friday to act as needed to keep the economy from sliding into recession, some analysts and even some policy makers caution that the central banks main tool may be ill-suited to the problem it faces. Like horses that rear up at the sight of a rattlesnake, investors who financed commercial lending have become spooked as the housing bubble turned to a bust and foreclosure rates on subprime mortgages began to skyrocket. Money for subprime mortgages, for people with weak credit, has already evaporated. And the paralysis has spread to more traditional home loans, business loans and corporate borrowing for billion-dollar leveraged buyouts. But the Feds main weapon for restoring confidence reducing its benchmark federal funds rate on overnight loans between banks to 5 percent or less, from 5.25 percent now would have little effect on fears about credit quality. The reason there isnt a market for these credits is that people dont know what pr
