Continued from page 1

“That should provide some relief fairly quickly for severely stressed capital positions in the banking system,” he said.

“There may be some light at the end of the long tunnel for the banking system and the economy,” he said. “However, it would be naive to assume that these measures alone will be a panacea for the economy. The economy is in the midst of a recession.”

Mr. Bethune expects the bailout bill and further interest-rate cuts by the Federal Reserve to “provide some scaffolding under the financial markets over the next few months to prevent a more serious meltdown.”

“But we do not expect to feel a palpable improvement in general credit conditions until perhaps the end of 2008 or early 2009,” he added.

While banks have been tightening the terms on mortgage and home-equity loans for the last year, consumers and businesses will increasingly encounter stricter terms as well on credit cards and other loans, said Bill Hardekopf, author of “The Credit Card Guidebook.”

“While it is difficult to predict if the bailouts will be successful and save the economy, we can reasonably predict that this recent financial earthquake is going to shake up the easy and generous lending practices of banks and lenders,” he said.

“Lenders are now focused on limiting their risk and protecting themselves,” such as by lowering credit-card limits and raising rates for risky borrowers, he said. “That easy credit will not be available for as many borrowers.”

Markets also are likely to remain volatile as news of the economy and bank fortunes continue to test investor confidence.

“One thing that is clear is that even with this massive bailout, markets will remain on rocky footing for some time as investors shun risk in this very uncertain environment,” said Tyson Wright, a foreign-exchange trader at Custom House, a Canadian investment firm.