Treasury Secretary Timothy Geithner said Tuesday the new administration will wage an aggressive two-front battle against the worst financial crisis in seven decades with commitments that could total up to $2 trillion.
But investors appeared wary of the government's latest plans. The Dow Jones industrial average plunged about 300 points in afternoon trading as financial stocks led the market lower, reflecting Wall Street's growing concerns about the government's ability to revive the banking industry.
The efforts were part of the government's major overhaul of the widely criticized financial rescue program.
The Federal Reserve said it would expand the size of a key lending program to as much as $1 trillion from $200 billion. The program, which has yet to begin operations, is designed to boost resources for consumer credit and small business loans.
The Fed said the program would be expanded to cover the troubled commercial real estate market and certain residential mortgages.
"Right now critical parts of our financial system are damaged," Geithner said. "Instead of catalyzing recovery, the financial system is working against recovery and that's the dangerous dynamic we need to change."
Geithner said the loss of 3 million jobs last year, and another 600,000 just last month underscored the urgency for government action.
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