The White House pressed the U.S. Congress publicly and privately Tuesday to pass a $700-billion US bailout package it hopes will contain a spreading financial crisis.

Congressional leaders — especially those who oppose the package — are being asked whether they want to be responsible for even greater economic harm than has occurred so far, the CBC's Henry Champ reported from Washington.

"And the whispers always include references to Oct. 29, 1929, the Great Depression and things of that nature," he said.

Although no one can be certain what would happen if the package is not passed, the threat is likely to carry the day, Champ said.

U.S. President George W. Bush said Tuesday he's confident that Congress will reconcile differences and come together to pass the bailout package.

Bush, who's in New York to address the UN General Assembly, said he has spoken with world leaders and assured them that the United States was taking the right steps to deal with the financial crisis.

"And I've assured them as well, having spoken to the leaders of Congress of both political parties, that there is the desire to get something done quickly," he said.

The package would rescue financial firms from hundreds of billions of debt that plummeted in value when housing prices began to fall in 2006.

The Treasury Department's first draft said that only mortgage-related assets would be purchased. But in a later version, Treasury Secretary Henry Paulson asked for the power to expand purchases to troubled assets beyond real estate.

That could conceivably leave taxpayers picking up the tab on things like bad car loans and credit card debt.

Democrats are calling for the measure to limit pay packages for executives of companies helped by the bailout and to allow judges to rewrite mortgages to lower the monthly payments of bankrupt homeowners.

Paulson, Bernanke urge quick passage

Publicly, Paulson and Federal Reserve chair Ben Bernanke urged Congress to quickly pass the bailout package, warning that letting problems persist would have dire consequences for the national economy.

In an appearance before the Senate banking committee, Bernanke said failure to pass the bailout plan could trigger a recession and more home foreclosures.

"The financial markets are in quite fragile condition and I think absent a plan, they will get worse," he said.

"I believe if the credit markets are not functioning, that jobs will be lost, that our credit rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover in a normal, healthy way," he added.

In his testimony, Paulson struck a similarly grave note.

"We must do so in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten … American families' financial well-being, the viability of businesses both small and large, and the very health of our economy," he said.

Paulson objected strongly when Democratic Senator Chuck Schumer asked whether $150 billion might be enough to get the program started, with a promise of more to come.

That would be a "grave mistake," Paulson said, and would fail to give the markets the confidence they need to rebound.

Members of both parties voiced their displeasure with being faced with the massive bailout request.

"Nobody is happy," said Steny Hoyer, House majority leader and a Democrat, although he said it was possible legislation could be passed by the weekend.

"Nobody wants to have to do this," said Representative John Boehner, the Republican leader, who added that he was hopeful of a quick agreement.

Meanwhile, the Federal Bureau of Investigation announced late Tuesday it is investigating four institutions whose collapse helped trigger the financial crisis.

Speaking on condition of anonymity, two FBI officials said the bureau was looking at potential fraud by mortgage giants Fannie Mae and Freddie Mac, investment bank Lehman Brothers Holdings Inc. and insurer American International Group Inc.

The inquiries, still in preliminary stages, will focus on the financial institutions and the people who ran them, one senior law enforcement official told the Associated Press.

Buy bad mortgages

The proposed bailout plan would enable the government to buy bad mortgages and other troubled assets held by endangered banks and financial institutions.

Getting those debts off their books should bolster their balance sheets, making them more inclined to lend and easing one of the biggest choke points in the credit crisis. If the plan works, it should help lift a major weight off the sputtering economy.

The U.S. has taken extraordinary measures in recent weeks to prevent a financial calamity that would have devastating implications for the broader economy. It has, among other things, taken control of mortgage giants Fannie Mae and Freddie Mac, provided an $85-billion emergency loan to insurance colossus American International Group Inc. and temporarily banned short selling of hundreds of financial stocks.

Wall Street has been dramatically reshaped amid all the fallout.

The Fed agreed to let Goldman Sachs and Morgan Stanley — the country's last two investment banks — become bank holding companies so that they can take deposits, like a commercial bank, in a bid to survive. Merrill Lynch agreed to be bought by Bank of America, Lehman Brothers sought bankruptcy protection and Bear Stearns was taken over by JPMorgan Chase.

The tone struck by Bernanke suggests that the Fed still has an eye on inflation, but is increasingly worried about the credit crisis, Sal Guatieri, senior economist at BMO Capital Markets, wrote in an early note to clients.

"Failure to quickly pass the rescue plan, or ongoing credit market stress after it is passed, could spur the need for further rate cuts."

Guatieri said a 44 per cent chance of an October rate cut by the Fed currently seen by the futures market "seems about right."

With files from the Associated Press