10 Banks Form $70B Fund to Stave Off Crash

Ten of the world's largest banks have formed a massive liquidity fund to mitigate the effects of the Lehman Brothers meltdown, reports the Financial Times. All the investment banks will be able to borrow up to a third of the $70 billion fund in order to reduce volatility and stay in business while Lehman is being wound down. They will also be able to borrow from the Fed under newly relaxed terms.

Henry Paulson said that the coordinated public and private measures would "be critical to facilitating liquid, smooth functioning markets and addressing potential concerns in the credit markets." But American authorities admitted that the aggressive moves would only reduce turbulence slightly, and that Wall Street is in for a very bumpy few days.
(More Lehman Brothers stories.)