WASHINGTON — Federal regulators will guarantee as much as $1.4 trillion in U.S. banks' debt in a bid to get the distressed financial system pumping again. They also took steps yesterday to make it easier for private investors to buy banks seized by the government.

Directors of the Federal Deposit Insurance Corp. voted to approve the bank-debt guarantee program, which is part of the government's financial rescue package. The FDIC program is meant to break the crippling logjam in bank-to-bank lending by guaranteeing the new debt in the event of payment default by the borrowing bank.

"This step by the FDIC is a significant step in the right direction," said Oliver Ireland, an attorney specializing in banking law at Morrison & Foerster who was an associate general counsel at the Federal Reserve. While the program itself can't restore confidence in the financial system, "I think this is a significant contribution to containing the problem," Ireland said.

Some analysts have said that freeing up bank-to-bank lending with the guarantees won't necessarily translate into a thaw in broader lending as banks are still wary of making loans to businesses and consumers.

While the FDIC threw a blanket of guarantees over the nation's banks, President George W. Bush ensured that millions of laid-off workers will keep getting their unemployment checks as the year-end holidays approach. Bush signed an extension of jobless benefits into law just before 8 a.m., as he was preparing to leave the White House for a morning flight to Lima, Peru, to attend the 21-nation Asia-Pacific Economic Cooperation forum.

About 1.2 million people would have exhausted their jobless benefits by the end of the year without the extension, sponsors said.