Fed Cuts Discount Rate....

At the same time it was backstopping J.P. Morgan's buyout of Bear Stearns, the Fed also stepped in to prop up the broader credit crunch. The Fed dropped its discount window rate -- at which intstitutions borrow directly from the Fed -- by 25 BP to 3.25%, and extended the maximum loan term to 90 days from 30. In an unprecedented move, it also opened up the window to securities dealers for at least the next six months.

The move to waive the usual restriction on Fed lending to banks was approved unanimously by the five FOMC governors.