(CBS/AP) Treasury Secretary Henry Paulson called for coordinated, international steps to deal with the global financial crisis, warning a meeting of the world's financial leaders that isolation and protectionism could deepen problems.

"Although we in the United States are taking many extraordinary measures to ease the crisis we are not pursuing policies that would limit the flow of goods, services of capital, as such measures would only intensify the risk of a prolonged crisis," Paulson said Sunday.

As the International Monetary Fund and World Bank held their annual meetings over the weekend, Paulson warned the bank's policy-setting committee of the dangers of "inward-looking policies."

"Financial market developments are having an acute impact on advanced economies, and we can expect the crisis to have major ramifications for emerging markets and the poorest countries as well," Paulson said. "Isolationism and protectionism will not offer a way out."

It was too early to determine whether the weekend discussions would calm jittery stock and credit markets.

But the first steps that may start to ease the crisis were taken at a meeting in Paris, where leaders from 15 European countries that use the euro as currency agreed to temporarily guarantee bank refinancing to ease the credit crunch.

Europe's leaders have rarely agreed on so much, so fast. But after meeting for only four hours, reported CBS News correspondent Elizabeth Palmer, they emerged with a plan to tackle the crisis.

French President Nicolas Sarkozy said the measure would apply through 2009 and was "not a gift to banks"

The head of the International Monetary Fund, Dominique Strauss-Kahn, endorsed the move and predicted favorable market reaction "although you never can be sure what will happen."

Strauss-Kahn also said he hoped the U.S. would take quick action to use part of a $700 billion rescue plan to purchase stocks in a wide variety of banks and other institutions, "the sooner the better."

CBS News correspondent Talia Assuras reported that experts say the process of purchasing bank stocks is much faster and more efficient than just buying up the bad debt. And speed is of the essence.

"If you buy preferred shares you can put the money in quickly," says economist Peter Morici. "You leave the process of working out the loans to the banks and, frankly, they understand that much better than the government of anyone the government would hire in New York City to do it."

"We did this during the Great Depression," Morici continues. "We are in that kind of crisis. So in my mind we should first of all recognize that the government is not nationalizing the banks and, second of all, that this is a required step to unlock credit markets."

Britain already has acted to take shares in some of its banks, and three of the largest British banks announced plans Monday to take up to $63 billion of government money to boost their balance sheets.

Royal Bank of Scotland Group PLC said it would raise $34 billion worth of capital. The government was to buy $8.6 billion of preference shares directly and underwrite $25.7 billion of ordinary shares.

The government was to inject a further $29.2 billion into Lloyds TSB Group PLC and HBOS PLC, two banks that are in the process of merging.

Outspoken billionaire investor George Soros told reporters on the sidelines of the IMF-World Bank meetings that the crisis was the worst in his lifetime. He said that financial regulators "have been consistently behind the curve" in dealing with it, but added that "the policy direction now is much more productive than it was a week ago."

U.S. lawmakers said they expected the Bush administration to take quick action on bank stock purchases to help unlock lending. The administration has not indicated when it would announce its next steps.

Sen. Chuck Schumer, chairman of the Joint Economic Committee, said an administration proposal to inject federal money directly into certain banks, in effect partially nationalizing the banking system, "is gaining steam."

Democrats also are lining up behind a plan by the leader of the House of Representatives, Nancy Pelosi, a Democrat, to bring lawmakers back into session after the Nov. 4 election to work on a second economic relief plan.

Top Democrats are suggesting a $150 billion measure that would extend jobless benefits, provide more money for food stamps and finance some construction projects, such as rebuilding bridges and roads. It would also include a tax rebate or tax cut.

Rep Roy Blunt, the second-ranking House Republican, said he would help on a plan "that makes sense" but is not laden with huge public works projects or bailouts for states that overspent on social programs.

In another step aimed at easing the financial crisis, the Federal Reserve on Sunday approved the $12.2 billion acquisition of troubled U.S. bank Wachovia Corp. by Wells Fargo & Co. Wachovia is the latest in a string of major banks and financial institutions that have been felled by financial crisis. The Fed action had been expected.

Meanwhile, the Wall Street Journal reported Sunday that Spanish bank Banco Santander SA is in "advanced talks" to acquire Philadelphia-based thrift Sovereign Bancorp Inc. Santander already owns a 25 percent stake in Sovereign.

In Washington, the World Bank agreed Sunday to help developing countries strengthen their economies, bolster their financial systems and protect the poor against the financial crises.

Robert Zoellick, the bank's president, said the contagion affecting the global economy "has been a manmade catastrophe and responses to overcome it lie in all our hands."

Zoellick said that as the crisis has unfolded, people in the United States and Europe reacted first with confusion, then anger, then fear.

"Those natural reactions will spread around the world as the impact spreads," Zoellick said. "We need to take them seriously."

He said any prolonged tightening of credit or a sustained global slowdown could cause serious setbacks to developing countries' efforts to improve the lives of their populations. These countries are already struggling with high prices for energy and food.

"We need concerted global action now not just to deal with this crisis, but to put in place new architecture, new norms, and new oversight to ensure that this crisis never happens again," he said.

He added: "The poorest and must vulnerable groups risk the most serious - and in some cases, permanent - damage. One hundred million people have already been driven into poverty this year and that number will grow."

He said the bank and the IMF must ensure that as governments turn their attention to domestic matters, they do not step back from their commitment to provide billions in aid to poor countries.

"Aid flows must be maintained," Zoellick said. "Today's meeting of ministers was unanimous in that regard."

The head of the bank's policy-setting committee, Mexican Finance Minister Agustin Carstens, said ministers were unanimous in their view "that the World Bank had to protect the poor and vulnerable in the context of the global financial crisis." He said the Bank needs to be flexible to address the differing problems faced by poor countries and those with rapidly growing economies.

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