Obviously, it's a bit early to tell whether the government's $85 billion bailout of American International Group will keep the financial sector from falling in on itself, but after watching the market's reaction today, things could be better.
As of 3 p.m. EST:
Shares of the last two investment banks standing:
TED spread (a measure of credit risk measuring the spread between 3 month T-bills and interbank LIBOR lending rates): 236 points. That's up from Tuesday and is the widest spread since this credit crisis started last August. It's also the widest since the stock market's Black Monday bloodbath in 1987, Bloomberg says.
The Federal Reserve is bailing out the banks, but Treasury is now bailing out the Fed by offering it new financing as the central bank shores up its own balance sheet. Obviously these things take time, but it's clear that some resolution on AIG isn't going to be a calming force in the markets.