That's because the idea that this is a credit crisis is incorrect, we are in a solvency crisis.

Banks have money to lend and, since they make money by lending they have every motivation to do so, there are two problems, however.

One: A lack of qualified borrowers. If you've lost your job or been foreclosed on, as millions have lately, you're not going to get a loan regardless of how much the banks have available to lend.

Two: The banks are insolvent. They're holding these various CDOs and MBSs that you've heard so much about as collateral for your deposits. The banks know (even though the FASB has given them license to deny) that these assest are not worth face value. As such they are hoarding any cash they can get in order to hedge against the devaluations they know are coming.

Providing liquidity to insolvent institutions that have no customers is not going to fix the problem. Unfortunately that's what we did and now we are much more trouble than we were last September.