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Crisis rippling into economy

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"The damage is not repaired by any stretch, and the markets are wise to hold back on a positive reaction to the Senate passing the rescue bill," says Bob Brusca of Fact & Opinion Economics in New York. "But the economic data is so terrible, the economy looks decisively in a recession, and the market has to deal with that."

Business leaders report the tightening credit milieu is becoming increasingly widespread. "It's more difficult to get a car loan, more difficult to buy large appliances, for small business to finance their purchasing," says John Castellani, president of the Business Roundtable, a Washington association of 160 CEOs of leading US companies.

The auto industry is especially feeling the crunch, with sales falling an average of 27 percent in September. Two states that are particularly hard hit: Florida and California, where buyers are used to tapping home equity lines to finance their vehicles.

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