WASHINGTON - THE White House on Wednesday defended the Treasury's plan to inject up to US$2 trillion (S$3 trillion) into the economy to rescue the crippled US financial system, after a sharply negative reaction on stock markets.

'The plan that the secretary outlined is not designed to take care of the market for one day,' White House spokesman Robert Gibbs said.

'The plan was not created, nor do I think it should be judged, by a one-day reaction in any of those stock markets.

'I hesitate to judge the breadth and comprehensiveness based on one day's reaction. I don't think that is how we judge the health of the financial system and I don't think it should be how one judges this plan.

Mr Gibbs also dismissed suggestions that the announcement of the finance rescue plan, a key moment in the early days of the Obama administration, had been rushed.

'The plan that was outlined was ready,' Mr Gibbs said, and suggested that some investors had perhaps been disappointed with the content of the initiative because they had believed inaccurate leaks in the newspapers.

'I am sure many in the banking sector had hoped presumably that assets would be paid for either in an unreasonable way, or at an unreasonable budget ... that might benefit shareholders and not taxpayers.'

Mr Geithner unveiled an initial fund of US$500 billion to absorb toxic assets from US banks through a public-private partnership, aimed at soaking up the sour investments clogging the financial system.

His plan also involves efforts to boost consumer lending, limit home foreclosures and provide new capital for banks. -- AFP