Bush says bail-out will be passed
President Bush on the ongoing bail-out talks
President George W Bush has said that legislators will "rise to the occasion" and pass the Wall Street rescue plan.
In a statement he said there were still disagreements because "the proposal is big and the reason it's big is because it's a big problem".
President Bush is expected to resume talks with Congressional leaders later on Friday to try to reach an agreement.
He wants to pass a $700bn (£380bn) rescue package to buy mortgage-backed assets from US banks.
"There is no disagreement that something substantial must be done," he added.
Republicans in the House are going to continue, they say, to try to resist this plan
The BBC's Adam Brooks, Washington
Senate Majority Leader Harry Reid, a Democrat, agreed, saying on Friday: "We're going to get this done and stay in session as long as it takes to get it done." He also said that "the insertion of presidential politics has not been helpful, it's been harmful" adding that Republican presidential candidate John McCain had not made his position on the financial rescue package clear.
Mr McCain, who had announced that he not take part in a presidential debate with rival Barack Obama until a bail-out plan was agreed, said on Friday that he would fly to Mississippi for the debate later.
Senators Harry Reid and Chris Dodd lay out their terms
Republican critics of the bail-out plan are worried about both its cost and how it would involve the government in the financial sector.
The BBC's Adam Brookes in Washington predicted a tough day of negotiations ahead.
"Republicans in the House are going to continue, they say, to try to resist this plan," he said.
"They are also trying to convince Senator John McCain, the presidential contender, to jump in their direction."
Instead, the rebels want a government-backed insurance policy to cover the huge amounts of bad debt built up by US banks.
Democrats meanwhile want to secure limits to payments for executives of failed banks and ensure there is adequate help for struggling US homeowners.
Financial markets are gummed up because banks do not know exactly how much bad debt they hold and are therefore reluctant to lend to businesses, consumers and each other.
The fall-out of this credit crunch continues to have a huge impact:
- The United States suffered its largest bank failure yet, when regulators moved in to close down Washington Mutual and then sold it to US rival JP Morgan Chase for $1.9bn
- In a co-ordinated move the European Central Bank, the US Federal Reserve, the Bank of England, Bank of Japan and the Swiss National Bank announced new short-term loans to the banking sector worth tens of billions of dollars
- Banks continued to cut costs, with UK banking giant HSBC saying it would axe 1,100 jobs
- Shares in UK bank Bradford & Bingley fell another 20% to 17 pence before recovering slightly
Talks to agree the huge bail-out of the financial industry ended in a "shouting match" on Thursday.
After several hours of discussions with President Bush, a group of Republican members of Congress blocked the government plan, which would have seen the government buy bad debts from US banks to prevent more of them collapsing.
The intense discussions reportedly saw US Treasury Secretary Henry Paulson literally down on one knee, begging Ms Pelosi to help push through the bail-out package.
However, the agreement unravelled when a group of Republican legislators objected to the principle of the plan.
The talks at the White House, led by Mr Paulson and US President George W Bush, then descended into what one participant described as "a full-throated discussion".