The crisis has led to the Bush administration's bail-out plan which would give the government broad power to buy the debt of any US financial institution for the next two years and would increase US national debt from $10.6 trillion to $11.3 trillion.
However, there were hopes on Wednesday that the markets would be buoyed by the decision of Warren Buffett's Berkshire Hathaway group to invest $5bn in the Goldman Sachs bank.
"It's clearly a positive when Warren Buffett sees value in a company," Richard Sichel, chief investment officer of Philadelphia Trust Co, said.
"Buffett is so highly regarded as an intelligent value investor, if he's putting a lot of money into a company that's been beaten down, it sends a message to the market that maybe not every financial company should be ignored at this point."
The investment came two days after Goldman, along with Morgan Stanley, changed its status to a bank holding company, giving them access greater access to credit but placing them under increased regulation.
There was a mixed response to the news in Asia as bourses as Japan's Nikkei fell 1.2 per cent in the morning session, but the Australia's benchmark S&P/ASX 200 index rose 0.9 per cent and Hong Kong's Hang Seng was up 1.9 per cent.
Ben Bernanke, the US Federal Reserve chairman, and Henry Paulson, the treasury secretary, on Tuesday urged the US congress to approve the bail-out.
"I feel a great urgency. I believe it's got to be done this week or before you leave," Paulson told the committee, referring to congress' planned adjournment on Friday.
The scramble to steady the US financial ship has left one man with enormous power to steer its course, with some already calling Henry Paulson, the treasury secretary, "King Henry".
Paulson had the same powers as his predecessors until a couple of weeks ago: oversight of the government's taxation and fiscal policies.
But as the financial storm erupted, with some institutions crumbling, sold or bailed out, Paulson's new job description has changed substantially.
If approved by congress, his rescue plan would give him sole control of a $700bn line of credit, and the power to use it to take on any bad mortgage-related debt he chooses.
Congress, and the two main presidential candidates, John McCain and Barack Obama, have called for greater oversight of such powers.
But the proposal does not specify what the government would get in return from financial companies for the federal assistance and legislators from both major parties were not impressed.
"What they have sent us is not acceptable. This is not going to work," Chris Dodd, the Democratic chairman of the senate banking committee, said on Tuesday.
Richard Shelby, the most senior Republican on the committee, said "we have got to look at some alternatives".
Congress is expected to vote in the next few days on the proposals with both Republicans and Democrats hoping for a quick resolution to the crisis.
Bernanke told the committee that, despite unprecedented steps already taken in the crisis, global financial markets "remain under extraordinary stress".
But Dodd said he was "angry" about being faced with a crisis that was "a preventable, avoidable situation" created by a political climate he described as "basically an eight-year coffee break".
"You had regulators sitting back as loans were being made with no documentation ... predatory lenders taking advantage of the situation - that's how this all unfolded. It's not a mystery," Dodd said.
The senator has proposed a number of amendments to the package, including a provision to allow the government to take a stake in the companies it bails out, limits on compensation for company bosses and severance packages of rescued firms as well as additional help for American homeowners facing repossession of their property.
Democrats, who control both chambers of congress, said that the White House had agreed to the creation of a board to monitor the bail-out, one of their key demands, but differences remain on levels of compensation.
Some critics have also expressed concern over the unprecedented power that the plan would give Paulson and the US government in the financial markets.
ABC News reported that the inquiry into the troubled financial giants was "multi-faceted and the net is much deeper than the major firms officials confirmed today," saying that the investigation had expanded from 14 major firms to 26 in less than a year.
"The FBI currently has 26 pending corporate fraud investigations involving subprime lenders," Richard Kolko, FBI spokesman, told ABC.
"As we have seen, this number can fluctuate over time; however, we do not discuss which companies may or may not be the subject of
Robert Mueller, the FBI director, said last week that the bureau was investigating 24 financial institutions, but gave no details other than to describe them as "large corporations".
Meanwhile, the Federal Reserve, put $30 billion into overseas money markets in an attempt to combat the credit crisis.
The action, taken at 05:00 GMT on Wednesday, set up temporary "swap" arrangements to supply dollars to the central banks of Australia, Denmark, Norway and Sweden in exchange for their currencies.
"These facilities, like those already in place with other central banks, are designed to improve liquidity conditions in global financial markets," the Fed said in a statement.