Washington must take immediate action to pull the United States out of a financial crisis that has put its entire economy in danger, U.S. President George W. Bush said Wednesday night.

He warned that reluctance to pass his administration's proposed $700-billion US financial rescue plan risks wiping out retirement savings, exacerbating home foreclosures, killing jobs, shuttering businesses and causing "a long and painful recession."

U.S. President George W. Bush urged swift passage of his administration's proposed $700-billion US bailout plan during a televised speech Wednesday night. (APTN/Associated Press)

"Our entire economy is in danger," Bush said during a 9 p.m. ET television appearance delivered from the White House East Room.

"Without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold."

Administration officials are waging a tough battle on Capitol Hill to try to persuade Democratic and Republican legislators to approve the bailout plan and prevent financial market conditions from worsening.

Bush explicitly endorsed several of the changes that have been demanded in recent days, but warned that he would not support regulations he believed could hamper economic growth.

"I propose that the federal government reduce the risk posed by the troubled assets and supply urgently needed money so banks and other financial institutions can avoid collapse and resume lending.

"This rescue effort is not aimed at preserving any individual company or industry. It is aimed at preserving America's overall economy. It will help American consumers and businesses get credit to meet their daily needs and create jobs."

Shortly before delivering his speech, Bush invited the two U.S. presidential candidates to the White House for emergency talks on the financial crisis. Both Democrat Barack Obama and Republican John McCain agreed to attend the meeting, which will be held Thursday.

Markets under 'extraordinary stress': Bernanke

U.S. Federal Reserve chair Ben Bernanke told Congress on Wednesday that global financial markets remain under "extraordinary stress." He said worsening conditions could further jeopardize an already troubled economy.

U.S. Treasury Secretary Henry Paulson has proposed buying up to $700 billion in bad debt held by financial institutions due to the dramatic decline of the U.S. housing market.

Legislators have voiced skepticism about the plan, and some report getting hundreds of e-mails and phone calls from voters objecting to the use of public money to bail out huge financial institutions.

Democratic Senator Chuck Schumer said members are hearing "intense anger" from their constituents.

Top House leaders, however, issued a statement late Wednesday saying that they had made progress toward revised legislation.

"We are committed to continuing to work co-operatively and on a bipartisan basis to safeguard the interests of the American taxpayers," said Speaker Nancy Pelosi and House Republican leader John Boehner.

"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."

Some politicians on Capitol Hill have indicated they would support a scaled-down version of the proposed bailout to allow government intervention into the financial crisis. That amended plan could see the release of somewhere between $150 billion and $200 billion, according to reports.

Other members have insisted that assistance for financially hard-pressed homeowners be included in the package, while others want a cap on compensation paid to executives of the troubled financial institutions.

Republican officials, speaking on condition of anonymity, said Paulson has bowed to demands to limit the pay packages of executives whose companies benefit from the bailout.

A draft of a Democrat plan obtained by the Associated Press shows that Senate banking committee chair Chris Dodd also wants the government to get a stake in the companies helped by the unprecedented rescue.

It also would add layers of congressional oversight, including an emergency board to keep an eye on the program with two House and Senate appointees.

McCain doesn't think bailout plan will pass

McCain went on television to say he doesn't think Congress will pass the bailout package in its current form and called on members to set politics aside to find a solution.

"It has become clear that no consensus has developed to support the administration's proposal," he said. "I do not believe that the plan on the table will pass as it currently stands and we are running out of time."

McCain said he was suspending his campaign to return to Washington and urged Bush to convene a leadership meeting from both houses of Congress, including himself and Obama.

He is also asking for a postponement of Friday night's televised debate with Obama until action has been taken to resolve the crisis.

"I'm confident that before the markets open on Monday, we can achieve consensus on legislation that will stabilize our financial markets, protect taxpayers and homeowners and earn the confidence of the American people," McCain said.

Obama calls for swift action

Obama joined McCain in calling for a bipartisan approach to resolving the crisis.

"The clock is ticking," he said. "We have to act swiftly, but we have to also get it right.

"And that means everyone, Republicans and Democrats, the White House and Congress need to work together to come up with a solution that protects American taxpayers and our economy without rewarding those whose greed helped bring us to this point," he said.

Obama said that not a dime of the money should go to company CEOs who created the mess, adding that "we can't allow this plan to become a welfare program for Wall Street executives." An independent board should be set up to provide oversight and accountability for how and where the bailout money is spent, he said.

Taxpayers should be treated like investors, meaning they should get their money back once the economy recovers, the Illinois senator said. He also insisted that the bailout must be accompanied by a plan to help "the millions of innocent homeowners who are struggling to stay in their homes."

Obama rejected McCain's call for a postponement of Friday's presidential debate. He said that, faced with the current financial crisis, it's more important than ever for the debate to go ahead.

With files from the Associated Press