The President's Working Group on Financial Markets said in a statement on Monday it planned to quickly implement the expanded authorities granted to federal regulators by the US$700 billion (S$1 trillion) rescue package passed on Friday. The working group was formed after the 1987 stock market crash.

The group, which includes Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, said it planned to move 'with substantial force on a number of fronts.'

The statement was one of a number of rapid-fire announcements released early on Monday before Wall Street stocks began trading.

It came as European governments took steps to limit the damage from the growing global financial crisis. Among other things, the governments of Germany, Ireland and Greece said they would guarantee bank deposits.

In a fresh effort to loosen dangerous credit clogs, the Federal Reserve said it will significantly expand its loan program to squeezed banks by billions of dollars.

The US central bank known as the Fed said that 28-day and 84-day cash loans being made available to banks will be boosted to US$150 billion a piece, effective on Monday. Those increases will eventually bring the amounts outstanding under the program to US$600 billion.

Loans that will be made available in Nov to banks also will be increased to US$150 billion each. That makes a total of US$900 billion in credit potentially outstanding over year end, the Fed said. Banks have a chance to bid on a slice of the cash loans at Fed auctions.

The Fed also said it will begin paying interest on commercial banks' reserves, another way to expand the Fed's resources to battle the worst credit crisis in decades.

Congress in the US$700 billion bailout bill President George W. Bush signed on Friday gave the Fed the power to pay interest on those reserves for the first time.

The law accelerated the effective date to Oct of this year versus in 2011. That will encourage banks to keep more resources at the central bank.

Meanwhile, Treasury said it would expand the size of its upcoming debt auctions to handle the increased borrowing needs to fund the US$700 billion bailout effort, which is expected to buy about US$50 billion in troubled assets each month.

Treasury said it was considering bringing back the three-year note besides expanding the size of other debt auctions.

The statement from the president's working group laid out a number of initiatives that the Treasury, the Fed and other government regulators including the Federal Deposit Insurance Corp. would be undertaking.

'The diversity of institutions and markets under stress, and the magnitude and complexity of the adjustment under way, requires that the tools available to policymakers, regulators and supervisors be used in forceful and coordinated ways across regulatory and supervisory agencies in the US and throughout the world,' the working group said in its statement.

Over the weekend, governments across Europe rushed to prop up failing banks. The German government and financial industry agreed on a US$68 billion bailout for commercial-property lender Hypo Real Estate Holding AG, while France's BNP Paribas agreed to acquire a 75 per cent stake in Fortis' Belgium bank after a government rescue failed.

Global markets sold off on Monday. In Asia, the Nikkei 225 closed 4.25 per cent lower. Europe's stock markets also declined, with the FTSE-100 down 2.72 per cent, Germany's DAX down 5.04 per cent, and France's CAC-40 down 5.501 per cent.

Major US indexes were ready to open lower as well.

Dow Jones industrial average futures fell 173, or 1.70 per cent, to 10,191. Standard & Poor's 500 index futures fell 25.80, or 2.33 per cent, to 1,082.50, while Nasdaq 100 futures fell 31.25, or 2.12 per cent, to 1,446.25.

The anxiety was again obvious in the credit markets.

The yield on the three-month Treasury bill slipped to 0.40 per cent from 0.50 per cent late Friday. Demand for bills remains high because of their safety; investors are willing to take extremely low returns just to have their money in a secure place. -- AP