Bush promises to deliver rescue deal

President George Bush pledged today that the US would "rise to the occasion" and pass a substantial rescue plan for the nation's economy.

Mr Bush said the legislative process "was not pretty" after emergency White House talks and negotiations on Capitol Hill ended in disarray yesterday.

But he insisted that Democrats and Republicans would come together and get a plan passed in a bid to stave off financial panic and a "long and painful recession".

In a sign that the stakes were high, US Treasury Secretary Hank Paulson got down on one knee in front of a small group of Democratic leaders at the White House yesterday to plead with them not to say anything that might disrupt the troubled deal, according to witnesses.

But the talks between Mr Bush, both presidential candidates, and top US politicians in the West Wing - thought to be unprecedented in US history just 40 days before an election - still ended without an agreement over a 700 billion dollar (£380bn) rescue package.

Democrats blamed Republicans for the impasse after late night negotiations on Capitol Hill also stalled.

Speaking outside the White House, Mr Bush said the negotiations were "hard work" as the plan was a "big proposal".

"The reason it's big and substantial is because we've got a big problem," he said.

"We also need to move quickly.

"There are disagreements over aspects of the rescue plan, but there is no disagreement that something substantial must be done.

"The legislative process is sometimes not very pretty but we are going to get a package passed.

"We will rise to the occasion.

"Republicans and Democrats will come together and pass a substantial rescue plan."

Earlier today, Barney Frank, chairman of the House Financial Services Committee, said that an agreement depended on House Republicans "dropping this revolt against President Bush".

"It's an ambush plan," he told The Early Show on CBS.

"I didn't know I was going to be the referee for an internal GOP ideological civil war."

Last night he said: "This is the president's own party. I don't think a president has been repudiated so strongly by the congressional wing of his own party in a long time."

The Republican dissenters were objecting to the cost of the rescue plan for US taxpayers.

The nation's economic woes continued yesterday with the largest bank failure in US history as federal regulators seized Washington Mutual following a wave of deposit withdrawals and sold most of its operations to JP Morgan.

Many political pundits believed the White House talks would result in a deal after Democratic and Republican negotiators reached a "fundamental agreement on a set of principles" on Capitol Hill earlier in the day.

The issue has become critical to the US election on November 4 and presidential politics intervened in the discussions.

Democrat candidate Barack Obama said "more work needs to be done" but added that "eventually we're going to get a deal" while his Republican rival John McCain suspended his campaign to focus on the crisis.

The 72-year-old Arizona Senator said some members of the US Congress had "legitimate concerns" about the substantial price tag for taxpayers, but that those critics were aware of the crisis the country faced.

He also said he was hopeful an agreement would be reached so he could attend the first presidential debate, scheduled to take place in Mississippi at 8pm local time tonight (2am BST on Saturday).

Mr McCain has called for it to be postponed, but Mr Obama said the debate should go ahead and the 47-year-old Illinois Senator added: "Presidents are going to have to deal with more than one thing at a time."

Democratic Senator Chris Dodd, chairman of the Senate Banking Committee, said the prospects of an agreement changed during the White House meeting.

"All of a sudden there was some new kind of core agreement floating around, which no one had heard of before until we got to the White House," he said.

"What this looked like to me was a rescue plan for John McCain for two hours, and it took us away from the work we were trying to do today - serious people trying to do serious work to come up with an answer."

He said it was a "sad day for the country" and the situation was "grave".

"To be distracted for two or three hours by political theatre doesn't help," he added.

Earlier, after negotiations behind closed doors on Capitol Hill, he had said he was "very confident" the US Congress could now act "expeditiously" and approve the plan.

Congressional aides said the plan would have given the Bush administration just a fraction of the money it wanted up front, with half the 700 billion dollar (£380bn) total subject to a Congressional veto.

The core of the plan involved the US government buying up troubled assets in a bid to keep them from going under and to stave off a recession.