The US Congress raced to strike a deal on a proposed $700 billion bailout of the financial industry in an intense weekend negotiating session aimed at alleviating the worst financial crisis since the Great Depression.
Pressed to act before Asian markets open on Monday, negotiators vowed to lock themselves in a room until they reach an agreement on buying distressed debt from financial institutions staggering under the weight of failed mortgages. "There is the widespread feeling that we are making good progress," said Senator Mitch McConnell, leader of the Republican Senate minority.
"The goal would be to vote on an agreement on Monday." Democrat lawmaker Steny Hoyer, majority leader in the House of Representatives, also voiced optimism a plan could be agreed to buy up toxic assets from banks and stave off the gravest financial crisis since the Great Depression.
"Hopefully by the end of ... tomorrow, we'll have a plan we can put forward, Hoyer told Fox News, after lawmakers debated the proposal into the early hours of Saturday. President George W. Bush expressed confidence a deal could be forged and sought to calm the wrath of many Americans who view the bailout as a huge handout for private companies while leaving ordinary people in the lurch.
"I know many of you listening this morning are frustrated with the situation," the president said in his weekly radio address. "You make sacrifices every day to meet your mortgage payments and keep up with your bills. When the government asks you to pay for mistakes on Wall Street, it does not seem fair." But the president, whose popularity levels have sunk to record lows, said there was no other way to redress the world's largest economy, and promised the final price tag would be less than 700 billion dollars. "The failure of the financial system would mean financial hardship for many of you," Bush said, warning an increasing credit squeeze would make it hard for people to borrow money.
"The result would be less economic growth and more American jobs lost. And that would put our economy on the path toward a deep and painful recession." US lawmakers are struggling to reach a deal after the original government plan put forward by Treasury Secretary Henry Paulson was criticised for failing to provide enough oversight.
The Paulson plan calls for the government to use tax dollars to buy up bad loans, including mortgages, and hang onto them, to provide greater liquidity for financial institutions. Bush vowed in his weekly address that over time the value of these assets would rise again. "This means that the government will be able to recoup much, if not all, of the original expenditure," he said.
Democrats and Republicans have expressed disquiet that so much taxpayers' money would go to private companies, blamed by many for triggering the meltdown, while failing to extend a helping hand to struggling homeowners.
Republican White House hopeful John McCain was Saturday set to return to the talks in Washington, after flying straight back to the capital following his first presidential debate with Democrat Barack Obama.
The two presidential nominees clashed sharply on their opposing plans for saving the economy in their debate in Oxford, Mississippi. But both dodged questions on whether they would support the bailout or scale back planned initiatives due to the strain on the US budget. And rebel House Republicans have put forward a rival plan calling for an expanded insurance system financed by banks to rescue individual home mortgages, so that taxpayers do not have to fund the bailout.
In a letter to Speaker Nancy Pelosi, House Republican leader John Boehner said the alternative proposal "reflects the core free-market, pro-taxpayer principles of our party."
The news that lawmakers had got back to work after a rollercoaster 24 hours when a deal appeared to evaporate helped rally Wall Street shares at the end of a bruising week on Friday. But with the world's largest economy in a tailspin, other governments are nervously watching the protracted talks, concerned their economies could fall victim to any contagion.
On Saturday, China's Prime Minister Wen Jiabao called for international co-operation to resolve the global financial crisis, saying Beijing's contribution would be to maintain its own economic stability. "All countries must strengthen their co-operation. They must all take proactive measures to deal with the crisis," Wen told a meeting organised by the World Economic Forum in the north Chinese city of Tianjin.