WASHINGTON — Urgently moving on multiple fronts to stem the worst financial crisis in decades, the government moved today to protect money market mutual funds against losses and temporarily banned short-selling of financial company stocks. The Treasury Department has asked Congress to give it sweeping power to buy up toxic debt that has unhinged Wall Street.

President Bush authorized Treasury to tap up to $50 billion from a Depression-era fund to insure the holdings of eligible money market mutual funds.

The dramatic action comes as Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are crafting a massive rescue plan to buy up dodgy assets held by troubled banks and other financial institutions at the heart of the nation’s financial crisis.

Congressional leaders said they expected to get the plan today and act on it before Congress recesses for the election.

The Securities and Exchange Commission early today imposed a temporary emergency ban on short-selling of financial company stocks, a trading method that bets the stocks will go down. As the financial crisis widened, entreaties had come from all quarters to stem a swarm of short-selling contributing to the collapse of stock values in investment and commercial banks.

Wall Street headed for a huge rally today. The government’s moves could help alleviate the uncertainty that has been sending the markets into tumult over the past week. Lending has grinded to a virtual standstill in the wake of the bankruptcy of Lehman Brothers Holdings Inc.

Global stock markets roared higher, too.

And European Central Bank, Swiss National Bank, and Bank of England offered up more cash today. The three banks put a combined $90 billion into money markets in a lockstep move.

The chairman of the Senate Banking Committee, Chris Dodd, D-Conn., warned America could be “days away from a complete meltdown of our financial system” and said Congress is working quickly to prevent that.

Mr. Dodd told ABC’s “Good Morning America” on today that the nation’s credit is seizing up and people can’t get loans.

The ranking Republican on the Banking Committee, Senator Richard Shelby, said America has “been lurching from one crisis to another” and predicted the new bailout plan would cost at least half a trillion dollars.

“We hope to move very quickly. Time is of the essence,” House Speaker Nancy Pelosi, D-Calif., said after Mr. Paulson and Mr. Bernanke briefed congressional leaders last night.

Stocks on Wall Street shot up more than 400 points late yesterday on word that a plan was in the works. Fallout from the housing and credit debacles have badly bruised the economy and pushed unemployment to a five-year high.

“I don’t say any prudent money manager would say we’re out of the woods, but right in this moment it all seems positive and leading toward an upward move for the market going into Friday session,” director of derivative investment strategy for New York-based institutional broker WJB Capital Group, Scott Fullman, said.

Mr. Fullman said the biggest bonus of any potential government plan is that it is being put together to help the banking industry as a whole. Until now, the Treasury and Fed have selectively bailed out institutions that were the most vulnerable.

“This staves off Judgment Day,” a professor of law and business at St. John’s University, Anthony Sabino, said. “This is a detox for banks, and will help cleanse themselves of the bad mortgage securities, loans and everything else that has hurt them.”

The roots of the current crisis can be traced to lax lending for home mortgages — especially subprime loans given to borrowers with tarnished credit — during the housing boom. Lenders and borrowers were counting on home prices to keep zooming upward. But when the housing market went bust, home prices plummeted. Foreclosures spiked as people were left owing more on their mortgage than their home was worth. Rising mortgage rates also clobbered some homeowners.

As financial companies racked up multibillion-dollar losses on soured mortgage investments, and credit problems spread globally, firms hoarded cash and clamped down on lending. That crimped consumer and business spending, dragging down the national economy — a vicious cycle policymakers have been trying to break.

“The root cause of the stress in the capital markets is the real estate correction,” Mr. Paulson said, adding he hopes to have a solution “aimed right at the heart of this problem.”

Mr. Bernanke said a resolution would help “get our economy moving again.”

Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, discounted the idea of setting up a new agency — similar to the Resolution Trust Corp. — established in 1989 to help resolve a savings and loan crisis at a cost to taxpayers of $125 billion.

“It will be the power — it may not be a new entity. It will be the power to buy up illiquid assets,” Mr. Frank said. “There is this concern that if you had to wait to set up an entity, it could take too long.”

The federal government already has pledged more than $600 billion in the past year to bail out, or help bail out, some of the biggest names in American finance. There was no immediate word on how much the new rescue plan might cost.

The SEC today said it was acting in concert with the U.K. Financial Services Authority in taking emergency action to prohibit short selling in financial companies to protect the integrity of the securities market and boost investor confidence.

“The commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets,” SEC Chairman Christopher Cox said in a statement. “The emergency order temporarily banning short-selling of financial stocks will restore equilibrium to markets.”

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Associated Press writers Martin Crutsinger, Andrew Taylor and Marcy Gordon in Washington and Joe Bel Bruno in New York contributed to this report.