A Line In The Sand

With the Dow making it’s largest one day point drop in history and lawmakers at an impasse over how to resolve the credit crisis, CNBC’s Steve Liesman worked the phones and came up with some insights for you.

The Bank Club

Liesman says he thinks the Federal Reserve is trying to create a club of elite banks. From what he can tell the guys in the club are JP Morgan , Bank of America , Citigroup, Goldman Sachs and Morgan Stanley . "I think those are five institutions the Fed will liquefy to the bitter end and will not let fail. That’s the line the Fed is drawing around the financial system."

Rate Cuts

Meanwhile, Liesman also tells us the Fed funds futures market has now baked in a full 50 bps rate cut by November.  However, don’t expect too much from the Fed immediately. Bernanke is probably wary of stepping in because the bailout has gone from a financial issue to a political issue.

The McCain Factor

In Iowa, Republican John McCain spoke about the failure of bailout legislation to pass Congress. He began his speech by saying, “I believe the challenges facing the economy could have a grave impact on every American worker, small business owner and family if our leaders fail to act.”

And the he added, "Now is not the time to fix the blame; it's time to fix the problem."

But the thing that made the hair on Steve Liesman’s neck stand up is when McCain said we need to go back to the drawing board. There is nothing else on the drawing board, Liesman adds. McCain's language makes me worried, he concludes.

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Trader disclosure: On Sept 29, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (MSFT), (WMT); Adami Owns (AGU), (BTU), (GS), (INTC), (MSFT), (NUE); Najarian Owns (AAPL) and (AAPL) Puts; Najarian Owns (BIIB) Calls; Najarian Owns (GS) Call Spread; Najarian Owns (MS) and (MS) Puts; Najarian Owns (NCC) Call Spread; Najarian Owns (WB) Put Spread; Najarian Owns (XLF) Straddle; Finerman Owns (GS); Finerman's Firm Owns (MSFT), (DVN); Finerman's Firm Owns (IMCL) Call Spreads; Finerman's Firm is short (IYR), (IJR), (SPY), (MDY), (IWM), (COF), (SPG, (BBT); Finerman's Firm Owns (BIIB) Calls

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