The Paulson-Driven Marshall Plan

Fed Pumps Cash Into System as World Financial Markets Fall

By Renae Merle, Howard Schneider and Mary Jordan Washington Post Staff Writers Monday, September 29, 2008; 11:22 AM

Stocks took a steep dive around the world today as troubles in the European financial sector offset news that lawmakers had reached a hard-fought consensus on the $700 billion bailout legislation. The Federal Reserve responded by injecting hundreds of billions of dollars into the U.S. and world financial markets.

The Dow Jones industrial average was down nearly 300 points, or almost 3 percent, at one point, while the Nasdaq was off more than 4 percent and the broader Standard & Poor's 500-stock index had declined more than 3.3 percent. In Europe, markets were off anywhere from 3 to 4.5 percent.

By 10:30 a.m., the Dow was down 260 points.

With world credit markets still sluggish and threatening to drag down the broader economy, the Federal Reserve more than doubled, to $620 billion, the dollars available to nine other …