There was a long article in yesterday's Wall Street Journal about what was happening. One of the major money market funds had Lehman Brothers paper, which was now worthless. The share value of that money market fund went below $1.00 which set off a panic. There were millions of requests from money market shareholders to withdraw funds - which meant the money market funds had to stop lending to banks and other businesses, in order to have enough cash on hand to meet withdrawal requests.
Businesses depend heavily on borrowing from money market funds, in the form of commercial paper, in order to meet their immediate operating expenses. But the credit market had dried up. If there was no money to borrow, businesses would have to shut down, workers would lose their jobs, and there was the risk of a complete financial meltdown. The market was hysterical.