Updated from 10/10/08

Officials from the Group of Seven nations, meeting in Washington Friday, agreed on a list of guidelines for stabilizing ailing banks and financial markets.

But the officials failed to go as far as some market participants had hoped. They were unable to reach agreement on a British proposal to have governments coordinate guarantees on loans among banks, The New York Times noted.

The group, which in addition to the U.S. consists of Britain, Canada, France, Germany, Italy and Japan, issued a five-point "plan of action" after Friday's meeting.

In the plan, the G7 pledged to continue to work together to "stabilize financial markets and restore the flow of credit." The group said member countries would "take decisive action" and use "all available tools" to prevent important financial institutions from going under.

The guidelines also included a commitment to ensure that national deposit insurance programs are strong and consistent, and a pledge to restart secondary markets for mortgages and other securitized assets where appropriate.

Additionally, the G7 said banks and other institutions would be able to get capital through public and private channels.

Following the meeting, U.S. Treasury Secretary Henry Paulson said the U.S. government is considering taking equity stakes in financial companies as part of its overall plan to stabilize the markets.

The G7 finance ministers gathered as the Dow Jones Industrial Average wrapped up its worst week ever, dropping 18% over the course of five sessions. Investor fears about the extent of the current financial crisis have triggered widespread stock selling, while credit markets remain frozen.

The crisis has its roots in toxic mortgages issued during the U.S. housing boom of recent years, but its effects have been felt around the globe, as financial institutions have failed and securities prices have plummeted.

Already this year in the U.S., investment banks Bear Stearns and Lehman Brothers have collapsed, while the government has been forced to bail out mortgage giants Fannie Mae ( FNM) and Freddie Mac ( FRE) and insurer AIG ( AIG). Merrill Lynch ( MER) has agreed to be acquired by Bank of America ( BAC) while Wachovia ( WB) has reached an agreement to merge with Wells Fargo ( WFC).
This article was written by a staff member of TheStreet.com.

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