Since 9 August 2007, the Fed and ECB offered three-month term funding, and together with other central banks injected significantly more liquidity into the financial system. The types of securities against which banks could borrow were broadened by the Fed and ECB to include mortgage backed securities – the Fed went a step further and accepted asset-backed commercial paper.
The relaxation of key restrictions on lending between banks and broker/dealers also helped to reduce liquidity pressures as it allowed banks to fund their own and other non-bank dealers more easily. On 16 August, the Federal Open Market Committee lowered its discount rate by 50 basis points, returning some calm to markets.