WASHINGTON (Bloomberg) — Treasury Secretary Henry Paulson urged banks getting $250 billion of taxpayer funds to channel the money to customers quickly to halt a credit freeze that's threatening to bankrupt companies and hammer the job market.

"Leaving businesses and consumers without access to financing is totally unacceptable," Paulson said in Washington. He rolled out the emergency programme after a crisis of confidence in the financial system last week spurred the biggest stock sell-off since 1933. Paulson told companies getting the government funds to "deploy" the money in loans.

The Treasury chief was forced to change tack from an initial plan to buy distressed assets from banks after the financial panic caused banks to hoard cash and send money market rates to record levels. In its biggest effort yet to halt the 14-month credit rout, officials will also offer guarantees on new bank debts and start purchasing commercial paper in two weeks.

The Treasury's stock buying programme will begin with nine banks, which it didn't name. People briefed on the matter said $125 billion will be disbursed in days: Citigroup Inc., Wells Fargo & Co., JPMorgan Chase & Co. and a combined Bank of America Corp./Merrill Lynch & Co. each will get $25 billion, while Morgan Stanley and Goldman Sachs Group Inc. will get $10 billion each. Bank of New York Mellon Corp. said it will receive about $3 billion and State Street Corp. said it's getting $2 billion.

"These are healthy institutions, and they have taken this step for the good of the US economy," Paulson said. "These institutions, along with thousands of others to come, will have enhanced capacity to perform their vital function of lending," President George W. Bush's working group on financial markets said in a separate statement.

Bush yesterday said "this is an essential short-term measure to ensure the viability of the US banking system," after meeting with Paulson, Federal Reserve chairman Ben Bernanke and other members of the working group, which includes the Securities and Exchange Commission and Commodity Futures Trading Commission.

Stocks rose around the world on expectations the rescue will help alleviate the credit crisis.Japan's Nikkei jumped 14.2 percent as trading resumed following yesterday's public holiday.

With the equity purchases, Paulson is using more than a third of the $700 billion in government support Congress gave him the authority to use on October 3.

Participating banks will need to accept limits on executive pay and so-called golden parachute payments. They also will need to give the Treasury warrants for an amount equal to 15 percent of the senior preferred investment, with a strike price determined by the bank's share price at the time of issuance.

The senior preferred shares will pay a dividend of five percent for the first five years and nine percent after that, the Treasury said. The purchase price of the stock will be the market price of the banks' common shares at the time of the transaction. Companies will be able to buy back the equity at par after three years.

The government expects to purchase equity in the nine banks within days and to use the full $250 billion by year-end, a Treasury official told reporters on condition of anonymity. While banks would not be forced to cut existing dividends, there would be some restrictions on raising them, the official said.

The US initiative followed an announcement that France, Germany, Spain, the Netherlands and Austria committed $1.8 trillion to guarantee bank loans and take stakes in lenders.