Investors who have been waiting throughout the credit crisis for Warren Buffett to ride to the rescue as the knight in shining armor have now gotten their wish.

A rout in General Electric shares was quickly halted after the company said that the famed investor would buy $3 billion worth of preferred shares. G.E. also plans to sell to the public as much as $12 billion in common shares.

More than his $5 billion investment in Goldman, today's move was full of drama. It came as the Senate was preparing to revive a plan to make the Treasury the savior of the financial system. Buffett's investment, while based on his belief that Washington will take action, will also be taken as a sign to some that private money can, or should, take the place of a government bailout.

And the deal came as worries mounted that G.E. could be the next big financial company to be in trouble.

Shares of G.E. tumbled as much as 9 percent at one point earlier today, and the cost of insuring G.E. debt against default surged. The turmoil was sparked by a price target cut by a Deutsche Bank analysts, who pointed to deterioration at G.E. Capital, the financial business that accounts for more than 40 percent of the company.

But G.E. is also a diversified conglomerate, whose industrial businesses have been doing very well, especially in the developing nations of the world.

Buffett highlighted these strengths in a statement.

"G.E. is the symbol of American business to the world," he said. "They have strong global brands and businesses with which I am quite familiar."

Like the Goldman investment, Buffett is taking his stake on very attractive terms. The preferred shares pay a dividend of 10 percent and are callable after three years at a 10 percent premium. Buffett's company, Berkshire Hathaway, will also receive five-year warrants to buy $3 billion of common stock with a strike price of $22.25 per share.

Shares of G.E. have fallen about 34 percent this year.