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Kai Ryssdal: Panic’s an awfully strong word. So we’re going to use a different one. Fear. There’s still a lot of it out there — bailout plan or no. We’ll tell you how the Fed and the markets are reacting. Things aren’t so hot in Europe, either. They realized this weekend they’ve got their own crisis to deal with. Stephen Beard’s going to fill us in. And former Lehman Brothers CEO Richard Fuld was on Capitol Hill today. Suffice it to say the reception was less than rosy.

Here’s how bad a day it was on Wall Street. The Dow finished down 360 points — that was about 400 points better than the lows of the day. But the story’s not really stocks, it’s credit — as it has been for weeks now. And our Washington bureau chief John Dimsdale reports the government’s efforts so far aren’t inspiring confidence.

John Dimsdale: The Federal Reserve tried to prime the lending pumps again this morning, dramatically expanding the cash available to struggling banks. Meanwhile, the Treasury Department cranked up the machinery to implement its buyout of troubled bank assets.

But economist Alan Levenson at T Rowe Price says the markets don’t think the cavalry is coming to the rescue soon enough.

Alan Levenson: The cold reality is that the Treasury got the legislation it wanted, but it’s not going to start buying securities for four or six weeks. So passing that legislation is not an immediate panacea to the problem.

Some Wall Street analysts say markets are looking for more — like a big interest rate cut, ideally a global one. But Alice Rivlin, a former vice chairman of the Federal Reserve, says interest rates aren’t the problem right now.

Alice Rivlin: Our fed funds rate is down to 2 percent. Would going to 1.5 [percent] make a difference? Probably not, because there’s been no discernable connection between that and any of the rates we really care about — like rates at which banks would be willing to lend if they were lending at all.

Others say stock markets are still not comfortable with the government buying parts of so many banks. Encima Global’s David Malpass says there’s an alternative to a cut in short term interest rates that might bring faster relief.

David Malpass: One thing they can do, for example, is bring mortgage rates down. Treasury now controls Fannie Mae and Freddie Mac, these gigantic global institutions that buy mortgages. They could just lower the rate on mortgages. I think that would help.

A cut in long-term mortgage rates got the endorsement of the head of the Federal Deposit Insurance Corporation, Sheila Bair, today.

Sheila Bair: Let’s face it, it’s the deteriorating quality of the mortgage assets. Or perceived deterioration that’s driving a lot of these other, the illiquidity in these other asset classes. So I think some combination of tools including credit enhancements might be a viable approach for Treasury.

Meanwhile, President Bush today asked for patience, saying the government’s rescue should not be set up so fast that it wastes taxpayer money.

In Washington, I’m John Dimsdale for Marketplace.