President Bush, warning of the danger of a "long and painful recession," urged Congress to pass his administration's financial rescue package for the sake of the American economy.
In a rare prime-time address to the nation Wednesday night, Bush pushed lawmakers wrangling over the $700 billion bailout legislation to consider the consequences of inaction, stating that "our entire economy is in danger."
He warned of a looming "financial panic," and he said the legislative package must be enacted "as soon as possible."
"We are in the midst of a serious financial crisis, and the federal government is responding with decisive action," Bush said.
The address came as Congress appeared to be making progress in hammering out a revised deal palatable to all sides. House Speaker Nancy Pelosi said Bush had "presented a long overdue assessment of the state of the economy and the urgent need for legislation to respond to the financial crisis."
Congress is "committed to passing bipartisan legislation that will stabilize the markets, protect taxpayers, establish tough oversight, and curb excessive CEO compensation. And we will pass it soon," Pelosi said in a written statement.
The bailout, which the Bush administration asked Congress last weekend to approve before it adjourns, is meeting with deep skepticism, especially from conservatives in Bush's own party who are revolting at the high price tag and unprecedented private-sector intervention.
Though there is general agreement that something must be done to address the spiraling economic problems, the timing and even the size of the package remained in doubt and the administration has been forced to accept changes almost daily.
Seeking to explain himself to conservatives, Bush stressed Wednesday night he was reluctant to put taxpayer money on the line to help businesses that had made bad decisions.
"The market is not functioning properly ... and major sectors of America’s financial system are at risk of shutting down.”
Bush said the rescue package is not aimed at saving any one financial institution, but rather at "preserving America's overall economy."
He cast the need for the package in personal terms, warning American taxpayers that their home values, their retirement accounts and their personal businesses could be at risk if the economy continues to spiral.
Bush explicitly endorsed several of the changes that have been demanded in recent days from the right and left, including one that calls for CEOs of failed companies to not be rewarded.
But he warned that he would draw the line at regulations he determined would hamper economic growth.
The address came after Bush invited John McCain, Barack Obama and congressional leaders to the White House on Thursday to discuss his administration's proposed bailout of the financial industry and press them to back the plan.
The invitation was extended Wednesday evening, and Bush called Obama personally to ask him to the Thursday afternoon meeting, which Obama accepted, his campaign said.
Rep. Barney Frank, D-Mass., who has led negotiations with Treasury Secretary Henry Paulson on the package, said that given the progress of the talks, the White House meeting was a distraction.
"We're going to have to interrupt a negotiating session tomorrow between the Democrats and Republicans on a bill where I think we are getting pretty close, and troop down to the White House for their photo op," said Frank, the House Financial Services Committee chairman. "I wish they'd checked with us."
Obama and McCain are calling for a bipartisan effort to deal with the crisis, little more than five weeks before national elections in which the economy has emerged as the dominant theme.
"The plan that has been submitted to Congress by the Bush administration is flawed, but the effort to protect the American economy must not fail," they said in a joint statement Wednesday night. "This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe."
Bush's address also came on a day in which McCain said he was suspending his presidential campaign to focus on working in Washington on the bailout plan, while Obama called that decision unnecessary and rejected calls to postpone the two candidates' debate Friday night.
The proposed $700 billion bailout plan, in its original form, has faced strong opposition on Capitol Hill this week. By Wednesday, Congress seemed open to a less costly plan as Democrats won a key concession from the White House on limiting executive compensation.
Top House leaders issued an upbeat statement at day's end saying that they had made progress toward revised legislation. "We are committed to continuing to work cooperatively and on a bipartisan basis to safeguard the interests of the American taxpayers," said Pelosi, D-Calif., and House Republican leader John Boehner of Ohio.
But they offered no timetable on a bailout that the administration said was needed more with each passing day.
Paulson and Federal Reserve Chairman Ben Bernanke spent most of the day in the Capitol, shuttling between public hearings on the proposal and private meetings with lawmakers.
In their statement, Pelosi and Boehner said, "We agree that key changes should be made to the administration's initial proposal. It must include basic good-government principles, including rigorous and independent oversight, strong executive compensation standards and protections for taxpayers."
Earlier, Paulson agreed to demands from critics in both parties to limit the pay packages of Wall Street executives whose companies would benefit from the proposed bailout.
"The American people are angry about executive compensation and rightfully so," Paulson told the House Financial Services Committee. "We must find a way to address this in the legislation without undermining the effectiveness of the program."
The issue has been a much-debated point in the struggle to win congressional approval of the historic rescue of the financial industry, though the "golden parachute" money involved would be relatively insignificant compared with the huge sums being talked about.
At the same time, Democrats were asking the Bush administration to dramatically cut the size of the rescue and then come back to Congress later if they need more.
Under that plan, which was still emerging, Congress would approve a fraction of what Bush is asking for — perhaps $150 billion or $200 billion — to allow the government to begin rescuing tottering financial companies.
Pelosi has privately suggested the idea to Paulson, according to officials who spoke on condition of anonymity because the negotiations are private.
Sen. Chuck Schumer, D-N.Y., pressed Paulson on the idea Tuesday and was told it would be a "grave mistake."
Frank said Wednesday, "Ultimately $700 billion has to be available but ... they are making progress about how to give people some assurance that it is not going to go to $700 billion in one fell swoop."
Frank, who as chairman of the Financial Services Committee has taken a lead in the negotiations, said Paulson also "accepts the fact" that the bill will give the government an ownership stake in the companies whose bad debts are taken over, a Democratic goal.
The heart of the unprecedented plan, dramatically unveiled less than a week ago, involves the government buying up sour assets of tottering financial firms to keep them from going under and to stave off a potentially severe recession and the accompanying lost jobs and further home foreclosures.
The Associated Press contributed to this report.