How will Congress' $700 billion financial rescue and $149 billion in tax cuts affect Utah consumers? Depends on what happens at the top of the lending chain.

The biggest issue behind the credit crunch is that banks are worried about lending to each other because so many banks are failing. That means money to lend to consumers and small businesses is in short supply. Even the state of California this week was having trouble borrowing money to keep operations going.

Now that Congress has passed the financial rescue package, the question is whether big investors think $700 billion is enough to stop more bank failures, said Scott Schaefer, finance professor at the University of Utah.

"One scenario is, if the (U.S.) Treasury spends $500 billion to buy bad debt, suddenly the hedge-fund managers look around at the banks and say, 'Now I see the banks are not going to fail, so I can lend my money to the banks without concern," Schaefer said. "Those are the things that free up credit. So if that happens, there should be a fairly quick restoration to the order of financial markets."

But it all comes down to trust. Sometimes, that's not earned overnight.

How will it help me?

Banks will be able to obtain money to lend to consumers, allowing the nation to "get back to doing the business of business," said Jeff Thredgold, economic consultant and Zions Bank chief economist.

Small businesses will have wider access to short-term loans to meet payroll, entrepreneurs could get money to bring ideas to life, and a family could more easily finance a new refrigerator. Utah Bankers Association President Howard M. Headlee has said Utah banks have been making those loans during the crisis. The rescue plan allows that to continue.

The federal government also has increased the amount for which individual bank accounts will be insured to $250,000. Previously, they had been insured to $100,000. The new limit might help a few people feel more comfortable putting their money back into banks, or leaving it there.

How long until it works?

It all depends on how long it takes for banks to feel comfortable lending to each other, local economists say.

"It's tough to get a mortgage loan right now; it's tough to get an auto loan right now. Hopefully, we see some signs in the matter of days those (credit) markets are beginning to loosen up," Thredgold said.

Kelly Matthews, economist and executive vice president of Wells Fargo in Salt Lake City, said that once that happens, "we can begin to address some of the underlying economic problems." Those problems are being felt in Utah and nationwide.