Credit market help will take time

NEW YORK — The jammed credit markets barely budged Monday as governments around the world scrambled to prop up their failing banks and investors waited for details on how, exactly, the Treasury will go about buying $700 billion of U.S. banks’ mortgage assets.

If lending remains tight, it could cause more cash flow problems for the companies and municipalities that rely on the credit markets and banks for short-term loans.

"It’s hard to exaggerate how bad things are. Things are still profoundly dislocated,” said T.J. Marta, fixed-income analyst at RBC Capital Markets.

Energy retailer Reliant Energy indicated Monday it may be searching for a buyer after getting slammed by stricter credit standards. Tobacco company Altria Group Inc. reportedly might delay its acquisition of smokeless tobacco maker UST Inc., while hotel company Wyndham Worldwide Corp. said tighter credit is forcing it to cut jobs.

Lending a hand

As stock markets swooned Monday, bank-to-bank lending remained pricey, indicating that financial institutions are still loath to lend.

The London Interbank Offered Rate, or LIBOR, for 3-month dollar loans eased only slightly to 4.29 percent from Friday’s nearly nine-month high of 4.33 percent. The overnight LIBOR for dollar loans edged back up to 2.37 percent.

To address the rise in LIBOR, to which many adjustable-rate mortgages are tied, the Federal Reserve said Monday it will expand bank lending.

These moves should help give banks more leeway to lend to others, but the process could take some time.