White House pushes hard for rescue

The Bush administration stepped up efforts on Wednesday to convince Congress to approve the $700bn financial rescue package as the White House announced that the president would make a prime time address.

The move thrusts George W.?Bush back on to centre stage after a period in which he has kept a relatively low profile. His popularity ratings are low and the campaign of John McCain, the Republican presidential candidate, has sought desperately to distinguish itself from the administration in the run-up to November's election.

Until Wednesday night, Mr Bush had made only brief public comments about the financial crisis and the administration's response, but as the debate on Capitol Hill about the plan intensified, the White House said he would step into the fray. "Everyone will tune in tonight because we are facing a once in a century crisis in our financial markets," said Dana Perino, Mr Bush's spokeswoman. Since the president felt Congress was nearing a solution, it was important to speak directly to the people.

Hank Paulson, Treasury secretary, and Ben Bernanke, chairman of the Federal Reserve, had previously warned the US economy could grind to a halt if the package is not approved – but did not appear to have won over legislators.

Although they persuaded Congressional leaders of the need for large-scale intervention in private meetings last week, they have had markedly less success in defending the plan in public hearings this week.

"The markets need to have confidence that this problem will be attacked with sufficient force?.?.?.?" Mr Bernanke told a sceptical audience at Congress's Joint Economic committee yesterday.

As concerns about the plan grew – involving issues such as oversight, limits on executive pay and the purchase of stakes in assisted companies, Democrats have stepped up pressure for Mr Bush to take a lead.

The party's ranks in Congress are particularly wary of being identified with a rescue focused on Wall Street when much of the rest of the economy is hurting.

"Where's the president here?" asked Chris Dodd, chairman of the Senate Banking committee before the White House announcement, characterising the plan as "give us the money and we'll see you later".

Republicans have become more suspicious of the proposal and the rationale for what would be one of the biggest government interventions in history. "To send a three-page proposal to the Congress and try to pressure us into doing something real fast, I think that's nonsense," said Richard Shelby, the ranking Republican member of the committee.

But one senior Democratic aide sought to dismiss fears the talks with the US Treasury would collapse. "We are working very hard. I believe we will come to an agreement", he said. Political resistance was not focused on the need for a plan but on structuring it in a way that would not reward those that created the problem, he said.

The Treasury said: "There's a broad understanding of the importance of getting something done this week."

But new data suggest the US housing market's prospects for a rapid recovery remain gloomy. A measure of existing home sales produced by the National Association of Realtors fell by 2.2 per cent in August, much more than expected by economists, and the inventory of unsold homes remained very high at 10.4 months, though it declined from record levels recorded earlier this year.

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