The US treasury is pressing Britain, Japan, Germany and other industrialised nations to copy its $700bn (£382bn) scheme to bail out the banking industry through a coordinated global plan to patch up the wounded financial system.
A proposed state-sponsored organisation to sweep up banks' toxic mortgage debt will require funding equivalent to more than $2,000 for every American citizen. It involves raising the statutory ceiling on the United States' national debt from $10.6tn to $11.3tn.
Henry Paulson, the US treasury secretary, said foreign banks would only be eligible for the bail-out if they had major operations in the US.
"I'm going to be pressing our colleagues around the world to design similar programmes for their banks and institutions," said Paulson during a round of interviews on Sunday. "Our system is a global one."
Congress is likely to rush Paulson's bail-out plans into law within days - although Democrats are demanding drastic cuts in Wall Street bankers' multimillion-dollar pay packages.
The British government is reluctant to make a similar emergency intervention. In London, a Treasury spokesman said Britain was adopting different tactics, including a £100bn special liquidity scheme for banks and last week's intervention to aid Lloyds TSB's takeover of HBOS. "We're not working on any similar plans in the UK," he said. "We're talking a lot to Hank [Paulson] and his team, but different nations might do different things."
Paulson's initiative is the biggest intervention in the financial markets by a US government since the Great Depression. In a document of just three pages, the US treasury has asked Congress for authority to spend up to $700bn, although officials point out that they will make some of this money back by reselling mortgage-backed securities once a degree of normality has returned to the markets.
"I don't like the fact that we have to do this. I hate the fact that we have to do this, but it's better than the alternatives," Paulson told Fox News. "This sticks in my craw, but it is by far the least costly way to proceed for the American economy."
The treasury secretary, who is a former Goldman Sachs executive, said hedge funds would not be allowed to use the facility, risking further wrath from the troubled high-risk investment funds, which are seething over a ban on short-selling in financial stocks.
In return for the bail-out, Democrats want Wall Street to end telephone-number sized salaries for senior executives.
"It would be a grave mistake to say we're going to buy up the bad debt that results from the bad decisions of these people and then let them get billions of dollars on the way out," said Barney Frank, chairman of the House financial services committee. "The American people don't want that to happen and it shouldn't happen."
Wall Street bosses are among the top earners in US boardrooms - Goldman Sachs' chief executive, Lloyd Blankfein, took home $68.5m last year and Lehman's Richard Fuld was paid $34m.
The bail-out gives Paulson's department sweeping powers to spend without liability to review by the courts. "He's asking for a huge amount of power," Nouriel Roubini, an economist at New York University, told Bloomberg News. "He's saying 'trust me, I'm going to do it right if you give me absolute control'. This is not a monarchy."
In a reminder of the fragile state of the financial industry, a West Virginia chain, Ameribank, was seized by regulators on Friday evening. On Wall Street, Morgan Stanley continued talks about a merger with the high-street bank Wachovia, or a capital injection from the China Investment Corporation. News of the plan halted a relentless sell-off in stocks, which some believe was close to becoming a stockmarket crash. Traders in New York suggested that if unchecked, the volume of "sell" orders could have wiped 22% off major indices.
Discount dilemma
How much is a sub-prime mortgage worth? The US government faces a dilemma in deciding what to pay banks for their underperforming assets. Top banks have written more than $300bn off the value of their mortgage-backed securities. Even at these discounted levels, few analysts attach much credibility to banks' valuations of holdings. But if the US treasury drives too hard a bargain, it could force such banks into bankruptcy, potentially causing an outcry. Bankers say the securities are far from worthless because they are all ultimately backed by bricks and mortar but negotiations are likely to be brutal.