Formally announced this morning, the move comes a day after the Dow Jones industrial average rose 936 points, the largest one-day point gain ever and almost twice the previous record rise of 499 points. Monday's jump erased half of the record losses that occurred through all of last week.
In response, world markets surged today. Japan's Nikkei set a single-day record by gaining more than 14 percent. Early trading in Europe showed gains of at least 4 percent in Britain, Germany and France.
U.S. plans follow similar agreements made overseas during the weekend, which allow European countries to pump money into struggling banksto encourage them to start lending again.
Most observers say the bold actions are needed.
"The markets are watching. People are watching," said Raghu Rajan, a professor of finance at the University of Chicago, Monday. "They are nervous and they are willing to have some confidence in the government, but if the governments don't pull it out this time, then the next time the breakdown will be much worse."
Meeting Monday morning at the White House with Italian Prime Minister Silvio Berlusconi, Bush said he was encouraged both by the agreements made abroad and plans under way in the United States.
"I welcome the bold and specific follow-up actions by European nations to pursue the G-7 [Group of Seven] action plan," Bush said. "And the United States is also acting, and we will continue to implement measures consistent with the G-7 action plan to help banks gain access to capital [and] restore confidence in our financial system."
"We are moving quickly -- but methodically -- but I am confident we are building a foundation for a strong, decisive and effective program," Assistant Treasury Secretary Neel Kashkari, interim bailout package chief, said Monday.
On Monday, the Treasury Department also announced that it had hired the Chicago-based EnnisKnupp and Associates to be its investment adviser. The firm will help the government identify assets that could be purchased from struggling banks under the Emergency Stabilization Act passed by Congress.
Meantime, Speaker of the House Nancy Pelosi, D-Calif., called for a second economic stimulus package Monday to be passed by Congress and said hearings would be held in the coming weeks to consider plans.
"Our country is at a very challenging moment, and we need the best thinking in our country to address those concerns -- concerns of the American people, taxpayers, workers, homeowners," Pelosi said at a morning economic forum. "We need to address the stability of our markets, the stability of our economy. And I am so pleased that we have so many leaders and thinkers in the field with us today."
Pelosi and House Democrats held meetings with prominent economists and financial experts Monday, including former SEC chairman Arthur Levitt, former Treasury Secretary Larry Summers and Joseph Stiglitz, the 2001 winner of the Nobel Prize in economics.
"We discussed this morning a recovery package that will enable America to lead, to participate in and take advantage of the opportunities that the 21st century will present to the world," Pelosi said, adding that she is working closely with the Obama campaign on the proposed recovery plan.