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The Minneapolis Federal Reserve Bank has published a working paper disputing the conventional wisdom on the credit crisis… they attack four specific fallacies… very worthwhile to review…

1. Bank lending to nonfinancial corporations and individuals has declined sharply.
   
2. Interbank lending is essentially nonexistent.
   
3. Commercial paper issuance by nonfinancial corporations has declined sharply, and rates have risen to unprecedented levels.
   
4. Banks play a large role in channeling funds from savers to borrowers.

From the working paper…

~~~ ” Clearly, the United States and the world economy are undergoing a major financial crisis. Here we examine several pieces of evidence on the nature of the financial crisis and the mechanisms by which the financial crisis is thought to affect the nonfinancial sector of the economy.

That the United States is undergoing a financial crisis cannot be disputed. Evidence of the financial crisis consists of the following: First, several major financial institutions have failed. Second, various stock markets have fallen dramatically, especially in the week after the bailout plan was passed. Third, spreads on a variety of different types of loans over comparable U.S. Treasury securities have widened dramatically.

Here we examine four claims about the way the financial crisis is affecting the economy as a whole and argue that all four claims are myths. Conventional analyses of the financial crisis focus on interest rate spreads. We argue that such analyses may lead to mistaken inferences about the real costs of borrowing and argue that, during financial crises, variations in the levels of nominal interest rates might lead to better inferences about variations in the real costs of borrowing.” ~~~~  

Website of the Federal Reserve Bank of Minneapolis