January 28, 2009

The Federal Reserve has cut rates to zero and flooded the financial system with money. Congress has spent $350 billion — and committed another $350 billion — to shore up the battered banking industry. Banks have already booked roughly half a trillion in losses, and analysts say they could be looking at a half a trillion more.

All of which has sent the Obama administration back to the drawing board to craft a new plan to save the banking system, get credit flowing again and try to pull the economy out of a deepening recession. The new plan could be announced as early as next week.