WASHINGTON — Congress promised quick action on a plan to buy up toxic assets, such as bad mortgages, held by troubled banks and other institutions, hoping to lift the nation out of its worst financial crisis in decades.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are crafting a plan, which they plan to soon deliver to lawmakers, after concluding they need broader powers to combat fallout from a housing and credit market meltdown that has sent shock waves through Wall Street and around the globe. Congressional leaders said they expected to get the plan Friday and act

on it before Congress recesses for the election.

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

Stocks on Wall Street shot up more than 400 points late Thursday 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,’’ said Scott Fullman, director of derivative investment strategy for New York-based institutional broker WJB Capital Group.

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,’’ said Anthony Sabino, professor of law and business at St. John’s University. ‘‘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,’’ Paulson said, adding he hopes to have a solution ‘‘aimed right at the heart of this problem.’’

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,’’ 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.

Paulson, Fed Chairman Ben Bernanke and other officials planned to work through the weekend on a solution.

Christopher Cox, chairman of the Securities and Exchange Commission, told lawmakers the SEC may put in a temporary emergency ban on all short-selling, not just the aggressive forms it already has targeted, according to a person familiar with the matter, speaking on condition of anonymity because no final decision had been made.

The ban might apply to stocks of selected financial companies, to all financial companies or even possibly to all public companies. Short-selling, which has been practiced on Wall Street for decades, is not illegal per se.

For more than a year, investors around the world have watched with growing alarm as the U.S. economy, the world’s largest, has struggled to right itself amid massive home foreclosures, many of them from mortgages issued to homeowners with bad credit.

The turmoil has swallowed some of the most storied names on Wall Street. Three of its five major investment banks — Bear Stearns, Lehman Brothers and Merrill Lynch — have either gone out of business or been driven into the arms of another bank.