The Federal Reserve is considering a major new intervention in the US financial system. Under the proposed plan, the Fed would purchase vast amounts of unsecured short-term debt, known as commercial paper. The move could essentially turn the Fed into a direct lender to American companies and increase the risk to taxpayers on top of last week’s $700 billion Wall Street bailout. The Fed also says it will make available $900 billion in loans to commercial banks. Just last month the Fed had capped its banks loans at $150 billion. In San Antonio, President Bush said the White House is addressing the crisis.

President Bush: “A lot of people here in Texas and around the country are not pleased with the government having to take the steps they took. Their question is, I pay my bills, I pay my mortgage, why — why are you helping Wall Street? And the answer is because had we not done anything, people like the folks behind me would be a lot worse off. We’ll make sure, as time goes on, this doesn’t happen again. In the meantime, we got to solve the problem.”

The new moves come as markets worldwide continue to plunge. On Monday, the Dow dropped 3.6 percent, closing beneath the 10,000 mark for the first time in four years. In Russia, the stock market dropped 19 percent, its biggest decline since the fall of the Soviet Union. Major stock market indexes in London, Frankfurt and Paris all fell by at least seven percent. And stocks in Latin America and other emerging economies had what the New York Times calls “their worst collective tumble in a decade.”