Why are banks no longer lending to each other? Are they afraid that collapse is imminent somewhere in the system, as with the Lehman collapse in 2008? No. They have new liquidity requirements. They have to hold a lot more cash than they used to. That's why, despite trillions in excess reserves, the overnight repo market dried up. The Fed’s stated objective in boosting the liquidity available to financial markets was simply to maintain its “target rate” for the interest charged by banks to each other in the Fed funds market. When the overnight rate moves above or below the target rate, the Fed intervenes. It's what the Fed does. What they've always done. Why were private capital markets once again in need of public support if there was no financial crisis in sight? They don't need support, they need liquidity, to maintain the target rate. Is the Run on the Dollar Due to Panic or Greed? As a "banking expert", Ellen is one hell of a lawyer...err...nutrition author...err...LOL! What the Fed was doing instead, it said, was reviving its “standing repo facility”—the facility it had used before September 2008, See? Not unprecedented.