The latest wave of turmoil in world markets followed the US Treasury’s change of strategy on tackling the financial crisis.
Treasury Secretary Henry Paulson said instead of purchasing devalued mortgages the bail-out fund would be used to buy into banks.
Paulson acknowledged America’s lead role in the downturn.
“We in the U.S. are well aware and humbled by our own failings and recognize our special responsibility to the global economy. The U.S. housing correction exposed gaping shortcomings in the outdated U.S. regulatory system, shortcomings in other regulatory regimes and excesses in U.S. and European financial institutions,” he said.
The bail-out plan was initially intended to buy bad home mortgages in response to the sub-prime credit crisis in US real estate markets.
US financial regulators have been criticised for not acting sooner. Fannie Mae and Freddie Mac, two quasi-government agencies had to be bailed out because of the number of failed mortgages on their books.