$250 billion injection into the nation's banks was needed to restore confidence and avoid a collapse of the financial system, according Treasury Secretary Henry Paulson Jr., he went on to say that the money will be made availibale to banks to help recapitalize them and to get them lending again, among themselves and to businesses and consumers.

With the proposal, the United States follows similar plans announced across Europe which are intended to inject money into the banks and unfreeze the credit markets. Markets around the world have rebounded on news of the coordinated efforts. The Dow Jones industrial average gained 936 points, or 11 percent on Monday, the largest single-day gain in the American stock market since the 1930s, and gained more than 300 points more in the opening minutes of trading on Tuesday. European markets were up at least 5 percent on Tuesday after rising nearing 10 percent Monday.

In addition to injecting money into the banks, according to the plan, the United States would also guarantee new debt issued by banks for three years.

The FDIC would also offer an unlimited guarantee on bank deposits in accounts that do not bear interest which brings the United States in line with several European countries, which have adopted such blanket guarantees.

And the Federal Reserve would start a program to become the buyer of last resort for commercial paper, a move intended to help businesses get the money they need for day-to-day operations.

According to President Bush, each of the programs protects taxpayers and is "limited and temporary."