Fed tries radical plan to curb credit crunch

Trader Dudley Devine leans on a phone post on the New York Stock Exchange floor, Monday Oct. 6, 2008. Story Published: Oct 7, 2008 at 7:21 AM PDT Story Updated: Oct 7, 2008 at 7:21 AM PDT By JEANNINE AVERSA, Associated Press WASHINGTON (AP) - The Federal Reserve announced Tuesday a radical plan to buy massive amounts of short-term debts in a dramatic effort to break through a credit clog that is imperiling the economy. The Federal Reserve, invoking Depression-era power under "unusual and exigent circumstances," will buy "commercial paper," a short-term financing mechanism that many companies rely on to finance their day-to-day operations, such as purchasing supplies or making payrolls. The $99.4 billion daily market for this crucial financing, which relies on investors rather than banks, has virtually dried up. Most investors... [read full story]