Article: Banks and Banking - United States Economy - Markets - Finances - Recessions and Depressions - Federal Reserve Bank - New York Times

THE Federal Reserve's surprise early-morning interest-rate cut last Tuesday has calmed, at least for now, a stock market storm that began in the Pacific Rim and roared around the world a day earlier. It was the Fed doing what it does best - simultaneously reducing the cost of money for the nation's financial institutions and signaling to investors that it would act quickly to counter fears of a consumer-led recession. But for all its power, the Fed cannot change this troubling fact: trust in much of the financial system - banks, brokerage houses, ratings agencies, bond insurers, regulators - has been severely damaged by the subprime mortgage crisis. And that damage cannot be reversed ...

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