Bailout efforts bring lower borrowing costs

By David Goldman
CNNMoney.com staff writer

NEW YORK (CNNMoney.com) - As Bush administration officials defended the government's response to the credit crisis Tuesday, there is one immediate and tangible result of their efforts: lower borrowing costs.

The Federal Reserve and Treasury Department have poured billions of dollars into banks in an attempt to increase liquidity and encourage lending. The government has also unveiled other credit-boosting programs, including a purchasing program for short-term business debt and loans in exchanged for toxic assets as collateral.

As a result, lending rates have retreated from historical highs set last month when the credit crisis reached its peak. The 3-month Libor rate fell Tuesday to 2.22 percent from 2.24 percent, and the overnight Libor rate held steady at 0.4 percent, according to Bloomberg.com.