( CNN ) -- U.S. Treasury Secretary Henry Paulson said golden parachute payments would be banned and the salary deals of bankers `` clawed back '' as part of the government 's $ 250 billion bailout of the financial sector . U.S. President George W. Bush announces his government 's bank bailout plan . Meanwhile , U.S. President George W. Bush on Tuesday of a $ 250 billion bailout plan to help stabilize the financial system . In Washington , Bush said the Treasury would buy into banks in return for shares using authority granted in the country 's $ 700 billion bailout bill . However , Paulson stressed taxpayers would get a return on their money and banking excesses would be brought to an end . `` Institutions that sell shares to the government will accept restrictions on executive compensation , including a clawback provision and a ban on golden parachutes during the period that Treasury holds equity issued through this program , '' he said . The world 's sharemarkets climbed again after European governments Monday announced bank bailouts worth more than $ 1 trillion and in anticipation of the U.S. bailout . Watch market prices . The Dow Jones industrial average surged 363 points in early trading after Bush and Paulson spoke before dropping back and eventually closing down by 76 points , or 0.82 percent . Bush said the measures taken in Europe were right , and had brought stability to the system . Watch the European Central Bank chief 's assessment » . `` This new capital will help struggling banks to fill the hole filled by crisis during the time we are in , '' Bush said . `` This is a short-term measure to insure the viability of America 's banking system . '' Watch Bush announce the plan » . He also announced that the Federal Deposit Insurance Corporation ( FDIC ) would `` temporarily guarantee most new debt '' issued by banks . `` This will address one of the central problems plaguing our financial system -- banks have been unable to borrow money and that has constricted their ability to lend to consumer and businesses , '' Bush said . `` When money flows freely between banks , it will make it easy for Americans to borrow money for homes and cars . '' The government , through the FDIC , would also immediately and temporarily insure non-interest-bearing transaction accounts which were used mainly by small businesses `` to cover day-to-day operations . '' `` By insuring every dollar in these accounts , we will give small business owners piece of mind and bring greater stability to the banking system , '' Bush said . Governments have rushed to pump capital into banks after a series of large failures left the financial system teetering on the edge of insolvency . Banks have stopped lending to each other and customers for fear they will not be able to recoup debts and over concerns that many institutions are still hiding massive sub-prime mortgage losses . Watch Nobel prize winner praise UK plan » . Paulson said the government would get preference shares in return for its investment . `` Nine large financial institutions have already agreed to participate in this program . They have agreed to sell preferred shares to the US government , on the same terms that will be available to a broad array of small and medium-sized banks . '' Watch more on the bailout funding » . According to reports banking giants Citigroup , Bank of America , JPMorgan Chase , Wells Fargo , Goldman Sachs , Morgan Stanley and Merrill Lynch would be among those to receive funding . Federal Reserve Chairman Bernanke said : `` I strongly believe that the application of these tools , together with the underlying vitality and resilience of the American economy , will help to restore confidence to our financial system and place our economy back on a path to vigorous , healthy growth . '' Markets in Europe saw big early gains drop back in afternoon trading . However , London 's FTSE , the Paris CAC 40 and Frankfurt 's DAX closed between 2.7 and 3.3 percent higher . Across the Middle East markets were up between 6.5 and 11 percent . Earlier , Japan 's Nikkei 225 posted a record 14.15 percent gain . South Korea 's KOSPI index gained 6.1 percent and Australia 's All Ordinaries picked up more than 4 percent . Watch the Nikkei Index bounce back » . Jesper Koll , of Tantallon Capital Research in Tokyo , said : `` The system is starting to work . We can see that credit markets are starting to stabilize . '' Meanwhile Iceland 's stock exchange reopened Tuesday for the first time since trading was suspended last Wednesday , with a value 76 percent lower than at its close value last week . Icelandic officials cautioned , however , that the new value reflected the absence of the three big banks that were nationalized last week and which represented 80 percent of Iceland 's stock market . Taking that into account , exchange spokeswoman Kristen Johannsdottir said the market was down only 2 percent in early trading .
U.S. President George W. Bush announces $ 250 billion bailout . Henry Paulson : Golden parachute payments and excesses will end . Japan 's Nikkei closes Tuesday up 14 percent , a one-day record .