The Fed made an extremely important decision to get credit markets moving again, including the market for nonconforming mortgages.  While the rate cut for discount window borrowing can be an important tool in providing funding for holders of mortgages, it is perhaps an even more important signal to secondary market participants that it will do what is necessary to get the market functioning again.  It certainly gives large lenders the wherewithal to maintain lines of credit to small mortgage originators, hopefully removing some of the pressures that have forced a number of small lenders to close their doors over the last few weeks.  The Fed is walking a careful line between providing the liquidity needed to get the markets functioning and bailing out market players who took on too much risk.