After days of singular responses, officials the world over were scrambling to get out ahead of growing expectations for more aggressive and coordinated action to prop up banks. Stock markets have plummeted in recent days as anxiety over the credit crisis - which began in the implosion of U.S. housing prices - has spread worldwide.
In the most dramatic move, the leaders of 15 European nations - gathering in Paris at an emergency meeting - agreed to a wide-ranging plan to shore up troubled banks by adding capital through investment and by guaranteeing inter-bank lending, said French President Nicolas Sarkozy.
"We want to give ... banks the means to lend, to support the economy to enable households to borrow for mortgages or consumption and give companies the means necessary to invest for growth," said Sarkozy, who also holds the rotating European Union presidency.
The 15 nations also said they would protect individual depositors' accounts and move to ease accounting regulations that determine how assets are valued, removing a requirement that they be based on market prices - so-called "mark-to-market" accounting.
Sarkozy announced the agreement after a meeting of leaders of the Eurozone countries, which use the euro. He said France, Germany and Italy will hold Cabinet meetings on Monday and will announce their plans.
"These measures will be implemented in France without delay," said Sarkozy.
Earlier in the day, Sarkozy met with British Prime Minister Gordon Brown. The British Treasury and some of the nation's biggest banks are expected to unveil details of a capital plan early Monday.
Other countries also took fresh action Sunday to support their economies. Australia, New Zealand, the United Arab Emirates and Saudi Arabia have all reportedly moved to guarantee bank deposits. Global markets have taken a beating as the financial crisis deepened around the world.
Coming up Monday in the United States, Neel Kashkari, appointed last week to oversee the $700 billion bailout program and the newly created Office of Financial Stability, will make his first public speech before the U.S. markets open on Monday. Kashkari, a former executive at Goldman Sachs, is expected to offer up details about how the bailout will be implemented.
G-7, G-20 and IMFThe meetings Sunday come a day after President Bush and finance officials from the Group of Seven, Group of 20 and the International Monetary Fund vowed vigilance in helping economies around the world on the road to recovery.
Concerns about the solvency of banks and financial institutions in recent weeks "had pushed the global financial system to the brink of systemic meltdown," said Dominique Strauss-Kahn, IMF managing director.
Strauss-Kahn said steps taken so far by the United States and European nations hadn't been fully effective and that more would be necessary in "the coming months."
For his part, President Bush on Saturday did not announce any new actions, but reiterated measures world leaders are taking to strengthen financial systems.
"We recognize that the turmoil in the financial markets is affecting all our citizens," Bush said. "All of us recognize this is a serious global crisis that requires a serious global response for the good of our people."
Both Bush and U.S. Treasury Secretary Henry Paulson spoke about the latest step being contemplated by the United States - injecting much-needed capital into banks.
"In recent weeks, financial market turmoil intensified throughout the world and credit markets froze, causing a chain reaction resulting in non-financial companies experiencing difficulty in financing normal business operations." Paulson told the IMF.
The Bush administration is considering whether to use the authority granted in the $700 billion rescue plan enacted on Oct. 3 to take ownership stakes in financial institutions to stabilize and restore confidence in them.
Strauss-Kahn of the IMF said Sunday that the recapitalization of banks is "absolutely needed."
The current crisis, he said, "started as a liquidity question. But the liquidity problems became too big. To solve a solvency problem you need to act directly."
Other countries are also taking action to inject liquidity, protect citizens' savings and strengthen financial institutions in their own nations, he said.
The G-7 pledged Friday night to take steps to keep leading institutions afloat, unfreeze credit, ensure banks have enough capital to kick start lending and safeguard depositors' funds and restart the secondary markets for mortgages and other securitized assets.
Bush said that it is vital that countries work together so that their actions don't undermine others. He pointed to the emergency interest rate cut enacted this week as an example of a coordinated effort.
"We're in this together, we'll come through this together," the president said.
But Bush warned that it will take time to see the results. So far, all the measures world leaders have taken have done little to calm jittery markets. "The benefits will not be realized overnight," he said.
Bush made a surprise visit Saturday at a G-20 meeting of finance ministers and central bankers.
Officials of the G-20 issued a statement late Saturday saying that the "global implications" of the crisis required international cooperation.
The G-20 is made up of rich and emerging nations that produce 90% of the world's economic output. The meeting in Washington came at Paulson's request. Federal Reserve Chairman Ben Bernanke was also in attendance.
IMF backs G-7 commitmentThe International Monetary Fund endorsed the G-7's commitment to do everything possible to jumpstart the world's economies.
The IMF's Monetary and Finance Committee said in a statement that it "recognizes that the depth and systemic nature of the crisis call for exceptional vigilance, coordination, and readiness to take bold action."
Strauss-Kahn of the IMF said the downturn could be worse than anticipated.
"The world economy is now entering a major slowdown as a result of the most severe shock to mature financial markets since the 1930s, adding to pressure on global economies from high prices for oil and other commodities," Strauss-Kahn said.
The International Monetary and Finance Committee - the steering arm of the IMF - began its 18th fall meeting Saturday. The 185-nation IMF was created in 1945 to coordinate international financial stability efforts, aiming to avoid financial collapses.
The World Bank, which is a similar organization with a slightly different mandate, was also holding its annual fall meeting over the weekend. It focuses on longer-term aid for troubled countries, investing in such things as infrastructure development.
On Sunday, Treasury Secretary Paulson said, "it is imperative that [the IMF and World Bank] stand ready to deploy their resources to mitigate the impact of this crisis, especially on the poorest and most vulnerable."
Week of fearThe meetings in Washington cap a week in which fear gripped financial markets worldwide. The Dow Jones industrial average had its worst week ever, falling just over 1,874 points, or 18%. Wall Street lost roughly $2.4 trillion in market value during the week, according to losses in the Dow Jones Wilshire 5000, the broadest measure of the market.
Since the mid-September collapse of Lehman Brothers sparked the latest chaos in the financial markets, Bush has repeatedly tried to reassure the Americans.
"We can solve this crisis - and we will," said Bush, in a speech at the White House Friday, his 27th commentary on the nation's financial health. "Here's what the American people need to know: The U.S. government is acting, and we will continue to act, to resolve this crisis and return stability to our markets," he said.
The government has started taking a number of steps to attack the crisis, Bush said. These include helping homeowners to refinance into more affordable mortgages; cutting the target for the federal funds rate; unveiling a plan to support the market for commercial paper; and offering government insurance for money market mutual funds.
The plan will authorize the Treasury to buy bad mortgage-related investments from finance companies, unfreezing the credit markets by freeing up banks and finance firms to lend once again.
The CNN Wire reports and the Associated Press were used in compiling this article.
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