For the fourth month in a row, Bank of England interest rates will remain at the record low of 0.5%. In an announcement today, the UK's central bank said it would not expand its quantitative easing of financial markets, much to the surprise of the market. The bank has been buying up assets aggressively, printing cash to finance what is likely to be £125 billion in purchases by the end of this month.

Financial markets expected a much different play, involving an increase in this asset purchase target by another £25 billion (to £150 billion). This move would have let the Bank of England shove even more money into the economy through next month, which is when the bank publishes its latest quarterly economic forecast.

Jan. 22: Dow 11,971 (down 128 points); trading range, 658 points

The specter of continuing the ugliness seen overnight in the global equity markets and a 95% decline in fourth-quarter (2007) net income at Bank of America (NYSE: BAC) combined to shake up those in charge of U.S. monetary policy.

So, facing the possibility of a 500-point drop in the Dow following the long holiday weekend, the Fed sprang into action early to shore up the markets.

The move was a 75-basis-point pre-market intermeeting cut just eight days before the Fed's regularly scheduled meeting to drop the fed funds rate to 3.5% and the discount rate to 4%. The Fed made this move "in view of a weakening of the economic outlook and increasing downside risks to growth," adding, "appreciable downside risks to growth remain."

The Dow battled all day to recover from an early session drop of 459 points to close down only 128 by the closing bell.

Greg Tucker is the executive editor of OptionsZone.com.

Ben Bernanke lacks a strategy to deal with the financial crisis. He just keeps dropping more and more money from his helicopter and hopes it will jump start the economic system. The futures market has already baked in a 50 basis point interest rate cut for this coming Wednesday so with the Dow having lost 312 points last Friday, it would probably collapse even further if Bernanke backed off the rate cut.

But what is the point of this cut? 30-year fixed mortgage rates are higher now (6.47%) than they were in August 2007 (6.45%) when the Fed began cutting the Fed Funds rate from 5.25% to what would end up being 1% if the Fed indeed cuts by 50 basis points on Wednesday. Paul Krugman argues that the high mortgage rates may be a result of U.S. policy not to put its "full faith and credit" behind Fannie and Freddie debt -- thereby increasing its risk. If the Fed was trying to loosen up credit, these numbers suggest its rate cuts are not doing the job.

And While there are some who anticipate it will cut only 25 basis points, I am not sure why the Fed thinks this rate cut will do anything more than use up precious ammunition that might be more useful in an even more severe financial emergency. At 1%, there is not much further to cut. And with the November election fast approaching, it is clear that a real strategy to analyze and fix the myriad financial problems Bush leaves his successor will not happen until January.

The Federal Open Market Committee (FOMC) lowered both the Federal Funds Rate and the Discount Rate by 0.50%. This move was designed "to forestall some of the adverse effects on the broader economy" resulting from recent financial market disruptions.

Most people were expecting that both interest rates would only be cut by 0.25%. My forecast had been that the Fed Funds Rate would be cut by 0.25% and the Discount Rate by 0.50%. The market has experienced a rally upon release of the news.

Although the Fed has expressed concern about the moral hazard of a rate cut that rescues financial market participants that assumed too much risk, the rate decision indicates that the economy is its primary concern. As I mentioned in an earlier post, the recent negative unemployment report is the key issue.

The markets appear to be stabilizing and the investing world is getting its arms around the magnitude of the credit issues. But, invariably what happens in tough times is the good come down with the bad. Several pure mortgage players have been eviscerated in the mortgage debacle as subprime and otherwise suspect loans have come back to roost. However, do not lump Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), and US Bancorp (NYSE: USB) into this category.

These three domestic banks have given very solid results for investors for both the March and the June quarters. Yes, they did take their reserves for bad loans to higher levels, but it did not cost them a quarterly miss or forward guidance reduction. The diversification of their earnings and revenue streams are just too powerful to be affected by the mortgage issues. Also, these three banks did not play in the riskier portion of the mortgage markets.

These banks however do stand ready to pick up market share of the mortgage market when the dust settles.

As the market absorbs the Fed's recent interest rate cut, investors will look to lock in yields. These big three pay superb dividends and have a terrific history of raising those dividends. USB yields 5.1%, Bank of America also pays 5.1%, and Wells Fargo pays 3.5%. All three sell at a discount to the S&P 500 current 2007 price earnings ratio of 15.5 times. They also have aggressive share buyback programs in place.

Normally I recommend bank stocks for superb yields and moderate growth. In this environment, these three stocks will offer great yields but also superb growth prospects. I can see price appreciation of 50% over the next two years for these three major players. The risk/reward profile is compelling and all three are strong buys.

Georges Yared is the CIO of Yared Investment Research and the author of Stop Losing Money Today.