President Bush has described the government’s bailout plan – decried by some as meddling in the free market – as an "essential short-term measure" to free up credit and unfreeze the economy.
Some $250 billion of taxpayer money is set to be invested in some of the nation’s largest banks, in an effort to encourage lending and restore confidence in financial institutions.
In a speech, Bush said that the "limited and temporary" actions taken by the government were necessary to avoid a larger recession.
"These measures are not intended to take over the free market, but to preserve it," he explained.
Treasury secretary Henry Paulson also fleshed out further details of the government’s economic plan, including a scheme to guarantee new debt issued by banks for three years and an unlimited FDIC guarantee on bank deposits in non-interest accounts.
Banks that receive investment money will have to agree to limits on executive compensation during the period they are receiving funds, Paulson said.
A recent survey conducted by Reuters and the University of Michigan revealed that 29 percent of Americans said they have "a lot less" confidence in the Federal Reserve than they did five years ago.