'This is a tough situation for America. We'll recover from it. The first step to recovery is to safeguard our financial system,' Mr Bush said after late night talks from Air Force One with Treasury Secretary Henry Paulson about a rescue plan for embattled banking giant Citigroup.

Under the plan, the US government will throw a lifeline to Citigroup in the form of fresh capital and a guarantee on sagging real estate assets, in return for a larger stake for US taxpayers in the banking group.

The cash injection will come from the Troubled Asset Relief Programme, a US$700 billion package approved by Congress earlier this year to thaw frozen credit markets and keep the US financial system working.

'We have made these kind of decisions in the past - made one last night. And if need be, we're going to make these kind of decisions to safeguard our financial system in the future,' Mr Bush told reporters from the steps of the Treasury building on Monday.

The outgoing administration was working closely with the incoming team to tackle the financial crisis and Mr Bush was keeping Mr Obama informed when key moves were taken, the president said.

'I told the president-elect when I first met him that any time we were to make a big decision during this transition, he will be informed, as will his team,' Mr Bush told reporters.

'Secretary Paulson is working closely with the president-elect's transition team. It's important for the American people to know that there is close cooperation,' he said. -- AFP