The central bank's most potent weapon, though, would be to lower the federal funds rate, now at 5.25 percent. That rate is the interest banks charge each other on overnight loans.
Cutting that rate would influence other important lending rates throughout the economy. Most notably, it would led to a corresponding reduction in commercial banks' prime interest rate -- now at 8.25 percent -- for certain credit cards, home equity lines of credit and other loans.
Bernanke, an economist and former academic, took the Federal Reserve helm in February last year. He succeeded Greenspan, who in his run of more than 18 years seemed to some to have a sixth sense about Wall Street's psyche.
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