The government’s move to take stakes in major banks has finally succeeded in easing some of the panic that’s locked up credit markets, reports the Wall Street Journal. Corporate-bond values rose and commercial paper began trading at lower rates, giving hope that the intervention is working, though experts say there’s a long way to go before business gets back to normal.
Large banks reported a drop in their costs to borrow from each other, a key barometer of credit availability, though it could be weeks or months before money flows freely enough for banks to resume lending to corporations, small businesses, municipalities, and individuals, the Journal says. Experts warn that the loosening may come too late for many borrowers who are teetering on the brink. The auto industry, casino operators, and retailers remain concerned that consumer spending will remain depressed.