WASHINGTON - WITH world financial markets on a stomach-churning ride, the Bush administration is scrambling to get a US$700 billion (S$1 trillion) rescue effort for the banking system up and running.

It's a daunting task, putting together what will be one of the world's largest asset management firms while rethinking how the programme should operate.

Mr Neel Kashkari, an assistant Treasury secretary running the programme on an interim basis, planned to give a progress report Monday.

Treasury Secretary Henry Paulson said during weekend meetings with global financial leaders that his department was working around the clock to carry out the plan. His comments were meant to convince investors that the world's largest economy is moving quickly to get lending restarted and avert what could be a deep and painful global recession.

Those dire concerns sent markets around the world reeling last week, giving the Dow Jones industrial average it worst week on record. Since peaking a year ago, the Dow is now down 40.3 per cent.

US stocks have lost US$8.4 trillion in value over the past year.

Throughout the weekend, the administration worked to restore confidence, using the annual meetings of the 185-nation International Monetary Fund (IMF) and World Bank to send a message that global finance officials will do what it takes to resolve the crisis.

The Group of Seven (G-7) major industrial countries issued a five-point action plan that pledged to do everything from preventing major banks from failing to unfreezing credit markets.

US President George W. Bush met with G-7 finance officials at the White House on Saturday morning and later traveled to the IMF to meet with the Group of 20, which includes rich countries as well as major developing nations such as China, Brazil, India and Mexico. He stressed the need for cooperation.

In Paris, the 15 nations in Europe's single-currency zone agreed on Sunday to steps including temporarily guaranteeing bank refinancings.

The Bush administration over the past six weeks has taken over the nation's two biggest mortgage finance firms, Fannie Mae and Freddie Mac, rescued American International Group, the world's biggest insurance company, and won congressional approval of a US$700 billion rescue package for the entire financial system.

As the bailout bill rushed through Congress, Mr Paulson stressed that the major aim was to buy bad assets, primarily mortgage-backed securities, from financial institutions.

The hope was that taking those bad loans off the books would encourage banks to return to more normal lending operations and unclog credit flows - the economy's lifeblood.

Mr Paulson said on Friday that the government also would use some of the money to buy stakes in banks. The goal is to give banks the resources to resume lending at more normal levels.

That about-face has left the administration trying to decide how much to devote to buying bad assets and how much to use for stock purchases.

Lawmakers who pushed to include the stock purchase program in the rescue bill over initial administration objections say the stock purchases can start much faster than the effort to buy bad assets - and help restore market confidence sooner.

Senator Charles Schumer of New York, chairman of the Joint Economic Committee, said on Sunday that he hoped the administration would announce as soon as Monday that the stock purchases were being launched.

'We're beginning a downward spiral, not just in finance ... but in the whole economy. We need quick action,' Mr Schumer said on ABC's This Week.

Mr Schumer and other Democrats lined up behind House Speaker Nancy Pelosi's plan to bring lawmakers back to Washington after the Nov 4 election to work on a second economic relief plan of up to US$150 billion. It would extend jobless benefits, increase food stamp funding and finance government construction projects. -- AP