Tim Geithner unveils new plan to rescue US banking system

US Treasury Secretary Tim Geithner has admitted America’s original bank bail-out was “inadequate”, as he set out a revamped plan to provide more than $2 trillion to stabilise ailing financial institutions and revive lending. Mr Geithner, who as the former president of the Federal Reserve Bank of New York was instrumental in devising the previous $700bn bail-out, admitted that the “force of government support” in the Autumn failed to prevent the “deepening pressure brought on by the financial crisis.”

Admitting public distrust in the first bail-out, led by his predecessor as Treasury Secretary, Hank Paulson, Mr Geithner admitted that today's “comprehensive strategy will cost money, involve risk, and take time.”

Today's plan comes a day after President Barack Obama used his first White House press conference to tell Americans that passing his massive economic stimulus bill would mean the difference between "catastrophe" and saving or creating "up to four million jobs."

US stock markets markets responded badly to the plan, with the Dow Jones Industrial Average extending losses to more than 3pc in early trading.