World Leaders Vow Concerted Action

The pledge to prevent the failure of institutions important to the entire financial system was an implicit judgment that it was a mistake for the United States to have permitted the collapse of Lehman Brothers last month -- a move that many experts believe started the seizure in the credit markets.

"That decision has precipitated a series of events that have unfolded, that are unfolding and that have precipitated further additional and deeper financial crises," Lagarde said yesterday.

Many questions remain about how countries will implement the common guidelines.

Paulson said that Treasury's new plan for direct investment in banks was designed to "use taxpayer money more effectively, more efficiently." But people familiar with the Treasury deliberations said that many bank executives would fear that participation would be seen as a mark of weakness. Another approach under consideration is to issue federal guarantees on the debt banks sell to investors.

The British government combined the two approaches in a program announced this week, offering to guarantee the debt of any institution that agreed to raise its capital to a specified level by accepting a government investment.

The Bush administration has concluded that it has the legal authority to take all these steps, as well as the authority to insure all bank deposits. The Federal Deposit Insurance Corp. currently guarantees about 72 percent of bank deposits, but the ceiling could be raised if government officials decide it is needed to protect systemwide stability. Banking regulators, however, said they do not think that is necessary now.

Congressional leaders are pushing for another round of spending to protect jobs and stimulate consumer activity. House Speaker Nancy Pelosi (D-Calif.) plans to convene a summit Monday in Washington, where key lawmakers will discuss a new stimulus package with Harvard economist and former Clinton Treasury secretary Lawrence Summers and other budget experts.

Pelosi has said that she could call lawmakers back to Washington after the Nov. 4 election to approve a stimulus package of as much as $150 billion, or 1 percent of GDP. That would be far larger than anything lawmakers have considered since Bush signed a stimulus package worth $168 billion in February.

Staff writers Binyamin Appelbaum, Lori Montgomery, Dan Eggen, Peter Whoriskey, Frank Ahrens and Neil Irwin contributed to this report.