(Read more on the debt and equity markets.)

NEW YORK CITY-Wall Street closed out a difficult week to say the least, with a mixed finish on Friday after the Federal Reserve and central banks around the world injected billions of dollars to provide liquidity to "facilitate the orderly functioning of financial markets." According to its statement, it will "provide reserves as necessary through open market operations to promote trading in the federal funds market at rates close to the Federal Open Market Committee's target rate of 5-1/4%."

In current circumstances, "depository institutions may experience unusual funding needs because of dislocations in money and credit markets," the statement notes. "As always, the discount window is available as a source of funding." Sources from the Federal Reserve were unable to be reached by press time.

Stuart Saft, partner at Leboeuf Lamb Greene MacRae LLP, a law firm that provides legal services to the energy, utilities and insurance industries, explains that the Federal Reserve's movement on Friday demonstrates just how serious they are. "What they are doing is sending a signal to the markets that we have a serious problem," he says. "This is just the tip of the iceberg."

Saft continues to explain that injecting billions in the market won't solve the problem. "The Federal Reserve realizes the problem; however, in order to make a difference in the financial markets, it must cut interest rates," he says. "Although cutting interest rates would certainly help with the current market crises, it could create additional problems with foreign buyers."

Nariman Behravesh, chief economist at Global Insight, explains that the market conditions will have an impact on commercial real estate by tightening credit conditions. "Riskier investments will suffer; however, good investments will continue to fly," he says. "The appetite for risk for most investors has diminished considerably. Quality of the investment is what will matter most."

Saft agrees that the market will affect investments, but says that it will affect everything, not just the riskier investments. "First it was a problem with subprime markets," he says. "Now, it has spread to all of the markets. All we can do is stay tuned."

Instant Insights /

Fed Reserve Rides in to Save Liquidity

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