Pushing for its $700 billion rescue package, the White House warned of a "calamity" if quick action on the financial crisis is not approved - but the plan failed to gain support in the US Congress.
A massive bank bailout plan failed to gain traction in the US Congress Wednesday as officials pressed for quick passage and the White House warned of a "calamity" if no action is taken.
Global stocks wobbled amid the uncertainty and Republican John McCain suspended his White House campaign as he headed back to Washington to try to help tackle the financial crisis.
President George W. Bush scheduled a televised speech later Wednesday to push for his embattled rescue plan.
Spokeswoman Dana Perino told reporters that Bush would say that his administration's 700-billion-dollar proposal to buy up troubled mortgage assets "is the right decision" in order to stave off "a once in a century crisis" in US financial markets.
Perino said the country faced a "huge moment."
"If we don't take decisive and bold action, we could be facing financial calamity," she told reporters.
At a second day of hearings on Capitol Hill, Treasury Secretary Henry Paulson renewed his plea for approval of the package.
"We must do so in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families' financial well-being, the viability of businesses both small and large, and the very health of our economy," he said.
Federal Reserve chairman Ben Bernanke added: Action by the Congress is urgently required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy."
Leaders of both parties scrambled to come up with a compromise that would help restore confidence in fragile financial markets.
House Financial Services Committee chairman Barney Frank said he believed it was possible to craft a plan that would pass.
"There are some people who I think are trying to derail it, but there are a lot of people who honestly want to make this work," he said.
"We've got to get this right," Senate Banking Committee chairman Christopher Dodd said. "There is no second act."
But some lawmakers argued the plan involves too much government intervention in the economy.
The Republican Study Committee said the Treasury plan "fundamentally alters the nation's free-market system in that it broadly socializes ... money-losing mortgage assets and places the US on a slippery slope whereby profits will also be nationalized."
Democratic Senator Charles Schumer suggested the package be cut to 150 billion dollars and gradually increased if needed.
In Hong Kong, thousands of savers mobbed branches of the Bank of East Asia to withdraw deposits, fearing their money was endangered because of the bank's exposure to Lehman Brothers and AIG.
The bickering in Washington sparked fears the package could either be stalled or undermined, leaving global stock markets jittery.
On Wall Street, the Dow Jones Industrial Average fell 0.27 percent in a choppy session in which the indexes drifted in and out of positive territory.
The Nasdaq composite edged up 0.11 percent and the broad-market Standard & Poor's 500 index fell 0.20 percent.
"The worry is clearly that Congress will get bogged down in political posturing instead of taking the necessary action," said John Wilson, equity strategist at Morgan Keegan.
"We believe that ultimately they will act and that the financial markets will breathe at least a temporary sigh of relief. This is likely to be a long process and the psychology of investors is going to ebb and flow according to the headlines of the day."
The London FTSE 100 index shed 0.79 percent, while in Paris the CAC 40 fell 0.61 percent. The Frankfurt Dax lost 0.26 percent.
Markets earlier in the day gained some support from legendary US investor Warren Buffett, who announced a 5.0-billion-dollar investment in humbled Wall Street bank Goldman Sachs.
McCain said meanwhile he was returning to Washington to help craft a nonpolitical solution.
"I do not believe that the plan on the table will pass as it currently stands, and we are running out of time," McCain said.
"We must meet as Americans, not as Democrats or Republicans, and we must meet until this crisis is resolved," the Arizona senator added.
Democrat Barack Obama rebuffed McCain's call to postpone the first presidential debate, arguing it was more than important than ever to present their ideas to voters.
"What I'm planning to do right now is to debate on Friday. My general view is that the American people need to know what it is we intend to do in moving the economy forward," he told reporters.
Date created : 2008-09-24