A New Direction on Wall Street

Panic and uncertainty have sent markets reeling.

Whether or not more firms merge on their own, it seems certain that the recent generation of a freewheeling Wall Street is ending. Washington will subject more financial firms to the same kinds of regulations that now apply to regular banks—especially if they're taking advantage of cheap federal loans or other government largesse.

In the end, what does the credit crisis mean to the average person?

There is a smidgen of good news here. Those who invest regularly through retirement accounts are now getting deals on shares that were pricier before, albeit after having seen their nest eggs decline by double-digit amounts, says Brad Sorensen of the Schwab Center for Financial Research.

What's more, mortgage rates have also dropped; the average 30-year fixed mortgage rate fell to 5.78 percent last week from 6.52 percent in August, according to Freddie Mac. That is prompting a rash of refinancing. As investors searching for safe havens in a rough market turn to "quality" vehicles such as treasury securities, the yield on 10-year notes has gone down. Since 30-year mortgage rates tend to follow the yield of 10-year treasury notes, they have also fallen, explains banking consultant Bert Ely. But whether this will last depends as much on overall confidence in the market as much as the economic fundamentals.

At the same time, credit card, auto loan, and mortgage lenders are increasingly picky about their borrowers after being forced to write off an increasing number of consumer loans. So while consumers with good credit can borrow money more cheaply, those with sketchier credit histories are finding it more expensive—if they can get approved at all.

Picky lenders. Higher rates. Hard-to-get credit. It's a scenario that Wall Street understands all too well these days.