Abstract
The problem: About $1 trillion of commercial paper will mature in coming months. If issuers can’t roll it over, firms will turn to lines of credit that they have arranged as insurance against such events. Banks will be forced to make these loans, and credit conditions elsewhere will tighten. Such a credit crunch will inevitably slow the economy. This column explains the what's, why's and how's of the unfolding crisis and provides a progress report on the Fed's actions.