The crisis: A timeline

In yet another move to encourage lending between companies, the Fed announced a new program Tuesday that would help businesses by buying up their short term debt, also known as commercial paper.

The short-term lending market had frozen, and companies began to worry that they would not be able to get the loans necessary to pay their bills or make payroll. The Fed stepped in hoping to restore confidence to a corporate borrowing market that had shrunk by 11% in three weeks.

But the news didn't do much to unfreeze the credit markets. Several key measures only eased very slightly, while the yield on the 3-month Treasury momentarily jumped above 1% for the first time in two weeks.

In a speech that day before the National Association of Business Economics in Washington, Fed chief Ben Bernanke said the economic outlook had worsened, and the financial crisis will hurt the economy well into next year. He also implied that more interest-rate cuts were on the way.

Later, the Fed reported that borrowing by consumers fell in August for the first time in more than 10 years, as budgets tightened and credit became scarcer.

Investors didn't like what they heard, and stocks fell to five-year lows. The Dow tanked another 500 points.

NEXT: Wednesday, Oct. 8 - Global coordination