clipped from thelede.blogs.nytimes.com

Bernanke provided additional context and information surrounding the Fed’s decision on August 17 to lower the discount rate, broaden the terms on discount window borrowing and issue a revised economic statement. In particular, the deterioration of financial market conditions combined with the tightening of credit in the first two weeks of August had appreciably increased the downside risks to growth. More specifically, the further tightening of credit conditions increased the risk that the weakness in the housing sector would be deeper and more prolonged than expected, with possible adverse affects on consumer spending and housing more generally.