Treasury bills - the 1-month T-bill is trading at about 3.14 as of yesterday after being almost 2.5% in late December.
Last year prior to the July/August meltdown the 1-month traded at about a 50BP discount to the Fed Funds Rate. If we are at 4.25% on the Fed Funds today and a 50BP cut is already priced in, the 1-month T-bill appears to be trading in its normal range.
My point is that with Libor resuming its normal behavior and the 1-month T-bill trading normally, it appears that much of the seizing up in the paper market is loosening here, likely due to the disclosure of formerly opaque losses by the large banks.
That is by no means going to fix things, but it's a step in the right direction for banks to resume the process of attempting to become insolvent without causing panic in the markets.