What supposedly started out as the “banker’s bank” has now simply become The Bank. The Fed is now lending directly to businesses, cutting out even the “need” for Congress to create something akin to the Reconstruction Finance Corporation (which still survives today as the Small Business Administration):

WASHINGTON (AP) – Frantically trying to stop the bleeding on Wall Street, the Federal Reserve took a first-time step Tuesday to get cash directly to businesses and hinted that interest rates could come down soon. Stocks continued their free fall anyway and hit new five-year lows.

The central bank invoked emergency powers to lend money to companies outside the financial sector and buy up mounds of commercial paper, the short-term debt that firms use to pay for everyday expenses like salaries and supplies.

The Fed, which has only loaned money to banks before, made the move as the gravest financial crisis in decades wore on and concern spread around the world.

In a speech to the National Association for Business Economics, Fed Chairman Ben Bernanke delivered a strong signal interest rates may need to be cut. And he warned the country could be stuck in the economic doldrums for some time.

Actually, we will be stuck “in the doldrums” much longer than necessary precisely because of what the Fed and the government (one and the same, face it) are doing. Thanks, Ben.