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The Federal Reserve Board made news by doing nothing. Only ABC assigned a reporter to cover the status quo for short term interest rates at 5.25%--the other two networks mentioned the decision in passing. "What would the Fed say and do, if anything, about the mess in the mortgage market and the credit squeeze now seeping into every corner of the economy?" Betsy Stark (subscription required) wondered. "Not much." The crumb of comfort Stark found was "the carefully worded statement" that the Fed is aware that "conditions have become tighter." In June, Stark pointed out, the credit available for businesses to borrow plummeted from a $1tr annual rate to $200bn.
To illustrate tight real estate lending, CBS' Kelly Wallace profiled 26-year-old Amanda Michalko, a would-be first-time homebuyer, who has been applying unsuccessfully for a mortgage since February. Wallace explained that bankrupt lenders and increasing foreclosures have forced credit standards to tighten. Her unidentified expert sources told her that the Federal Reserve "is more concerned about holding down inflation than easing the credit crisis." Michalko only finalized a loan when her father agreed to co-sign for her. "A year ago, her broker says, Amanda would have gotten one by herself."
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