US Treasury Secretary Timothy Geithner was today calling for more power to deal with failing financial institutions other than banks, such as insurance giant AIG.

Geithner was set to use testimony on the rescue of AIG to focus on the need for new tools to deal with future crises. He wants powers similar to those enjoyed by the Federal Deposit Insurance Corp, the bank regulator, which can wind down failed lenders and insure deposits.

The demands come a day after he unveiled plans to buy $500 billion to $1 trillion of toxic assets from banks in a bid to save the US economy.

Those plans were welcomed by investors around the world, and he now wants new powers to allow the authorities to step in more easily and combat problems at other systemically important institutions on the verge of failure.

AIG has received $180 billion of government bailout funds.

"We must ensure that our country never faces this situation again," Geithner was expected to say. "To achieve that goal, the administration and Congress have to work together to enact comprehensive regulatory reform and eliminate gaps in supervision."

Stock markets soared yesterday on news of Geithner's bank bailout. The Dow Jones Industrial Average was up nearly 500 points or 7% to 7775.86 last night and Asian stocks were also on the rise this morning.

But investors in London paused for breath today. The FTSE 100 index was up 14.59 at 3967.4, having gained more than 100 points or 2.9% yesterday.

Footsie crashed below 4000 in mid-February and sank as low as 3512 in early March. Despite its recent rally, it is still down 10.5% this year, having lost nearly a third of its value in 2008.

However, analysts say investor confidence remains fragile around the world despite Geithner's plan.

"At the end of the day, there has been no game c hanger, even if the plan is implemented perfectly. And that's an enormous 'if'," said Kirby Daley, senior strategist at Newedge Group in Hong Kong.