Geithner acknowledged deep skepticism has developed over the fairness and efficiency of a $700-billion bank bailout program approved by Congress in October. He said leaders of some financial institutions that have received money had squandered the good faith that is needed to make the bank rescue effective.

"The spectacle of huge amounts of taxpayer money being provided to the same institutions that helped cause the crisis, with limited transparency and oversight, added to public distrust," Geithner said.

The revamped approach to the government's financial rescue war chest would use $100 billion to cover risks the Fed would take in expanding a $200 billion program supporting consumer and small business lending to a $1 trillion program that also supports an array of mortgage-related assets.

Markets appeared caught off balance by some of the measures that Geithner offered.

"Just a day ago, they were talking about good bank and bad bank. Now they come up with something completely new," said Robert Brusca, chief economist for Fact and Opinion Economics in New York. "I'm not sure how this public/private thing will work."

President Obama told a news conference on Monday that cleaning up banks' balance sheets was a priority and didn't rule out the possibility that it will take more money than the $700 billion Congress already has approved to complete the job.

"We don't know yet whether we're going to need additional money or how much additional money we'll need until we see how successful we are at restoring a level of confidence in the marketplace," Obama said.

The financial-rescue plan contains a number of measures meant to ease the credit crunch, including a public-private initiative to take bad assets off of banks' balance sheets, mortgage loan and foreclosure relief and a new consumer lending initiative.

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Although the concept of creating a "bad bank" to house these assets was considered earlier in the plan's development, it now instead envisions creating a fund to facilitate the asset sales and purchases. The fund for toxic assets is one of for major components, of the plan.

Other components include the creation of a new consumer-oriented initiative "to kick start the secondary lending market," funds for loan modification and foreclosure prevention and a "capital buffer" for banks so they can continue lending to consumers and business."

Here's a breakdown on the costs:

The consumer lending facility will "leverage up to $1 trillion dollars" and is intended to "bring down borrowing costs for responsible borrowers and help get credit flowing again."

The housing measures will provide as much as $50 billion in funding, which follows through on an earlier pledge of the Obama administration.

The summary does not provide a sum for the toxic asset fund or so-called buffer capital for banks.

The bank capital provision also calls for a "stress test" among "uniform standards to help clean up and strengthen banks."

Thus far, the TARP has provided aid to firms through capital injections, for which the government received preferred stock and warrants in return. The government also recently started using insurance and guarantees to back certain toxic assets held by firms. Known as a ring fence concept, the model has been used on Citigroup and Bank of America . It is unclear where the ring fencefigures into the new plan.

The Treasury plan also includes measures to "increase transparency and accountability to protect taxpayers."

Chief among them are restrictions on stock dividends and repurchases as well as acquisitions "to provide assurance that all taxpayer money will go to promote lending until that money is paid back."

Also included are previously-announced restrictions on executive pay, and new tighter reporting requirements for banks receiving government aid.

House Democrats have been pushing for stronger lending conditions—as well a crackdown on executive pay—in the wake of criticism of former Treasury Secretary Henry Paulson's administration of the TARP. That was seen as both too lenient on and too generous to financial firms, which critics allege were hoarding capital instead of lending it.

The new Treasury plan will "require banks to show how government assistance will expand lending and how they intend to use taxpayer dollars, which is similar in the tone and design of the House Democrat's proposal.

At this point, it is unclear where the additional funding for TARP programs would come from and whether additional authorization or legislation from Congress would be necessary. In his nationally televised press confernce Monday night, President Obama did not address that issue.

"We don't know yet whether we're going to need additional money or how much additional money we'll need until we see how successful we are at restoring a level of confidence in the marketplace," Obama said.

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Congressional Democrats, however, have made it clear that future funding depends on the success of the new initiatives.

"There has to be some sort of sales job to the people before we go out on the limb and appropriate new money,” said a senior Congressional staffer before the presentation Monday evening. “Any new money will be largely leveraged on how they do with this money.”

—Reuters contributed to this report.