The Fed along with Canadian and European Central Banks are flooding financial markets with money trying to drive down interest rates and provide liquidity. The European intervention was their largest ever, $130 billion.
Calculated Risk has more. From the comments there.
The ECB intervention is not at all common, and certainly not at the $130B level. I tend to agree with notions that something is seriously screwed up. One interpretation of money market rates shooting up was that, at the interbank level, banks were losing confidence in their counterparties. I think rather the reverse: banks are losing confidence in their own balance sheets and are looking for cash to deal with their own problems.
Investment banks are desperately trying to avoid repricing their portfolios, because once they do, a balance sheet that appeared healthy just last month may now insteadÃ‚Â resemble a smoking crater.