Click to play videoWashington: US President George Bush calms fears of global meltdown, says that the US administration is taking all possible measures to solve the economic crisis.
"We must act now to protect our nation's economic health from serious risk; there will be ample opportunity to debate the origins of this problem. Now is the time to solve it,” Bush said.
Bush said an unprecedented and comprehensive rescue plan, which could run into hundreds of billions of dollars, was the only way to keep the financial sector from total collapse and prevent credit availability to US consumers from drying up completely.
"The American economy is facing unprecedented challenges. We are responding with unprecedented action," Bush said in remarks at the White House.
He was flanked by his top finance chiefs - Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission chairman Christopher Cox.
Paulson earlier said he would be working with Congress over the weekend on legislation that would allow the government to buy up banks' mortgage-related assets, which have plummeted in value and are at the centre of the current financial turmoil.
Few exact details of the plan have been revealed, but it essentially involves creating a new government agency that could soak up all the bad assets that are bringing down the US financial firms.
Bush said the intervention would require a "significant amount of taxpayer dollars." Paulson earlier said the cost would be in the "hundreds of billions".
"I am convinced this bold approach will cost American families far less than the alternative," Paulson said. "The financial security of all Americans ... depends on our ability to restore our financial institutions to sound footing."
Bush said he was confident the mortgage-backed securities, which the government is now taking on, would recover their value in the longer term. Their value has plunged due to a record rate of home foreclosures in the US, but Bush pointed out that most Americans still paid their mortgages on time.
Major US stock indices surged Friday morning amid a record volume of trading on Wall Street. The Dow Jones Industrial Average was up four percent. Shares of financial firms surged 20-30 percent on opening.
Wall Street stocks have been extremely volatile this week and banks have begun hoarding cash in response to a shortage of capital in firms that were dealing in mortgage-related assets.
Comprehensive legislation could be adopted by Congress in the coming week. House of Representatives Speaker Nancy Pelosi acknowledged "time is of the essence", after a briefing Thursday night with Paulson and Bernanke.
The Treasury also announced a $50 billion guarantee programme for money-market mutual funds as panicked account holders started withdrawing their investments Thursday. The Federal Reserve in conjunction unveiled new loan programmes to banks involved in money-market funds.
Bush said the action was designed to restore confidence in a "key element" of the financial market. Investors and consumers could be assured their money-market funds were insured.
The new moves represent a broader approach to dealing with the crisis, as opposed to what Paulson acknowledged had been "case-by-case" government bailouts and stop-gap measures taken since the beginning of this year.
Also as part of the comprehensive plan, the Securities and Exchange Commission temporarily banned the practice of short-selling, a stock trading technique that critics argue has helped fuel a furious sell-off of financial stocks on Wall Street this week.
Bush said the move was "intended to prevent investors from driving down the price of particular stocks for their own personal gain."
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