White House finance meeting ends without deal

But the agreement reached among the leading members of Congress apparently did not receive immediate approval by Bush and Paulson.

Among other issues, the congressional plan was said to call for an incremental dispersal of the $700bn, beginning with an initial $250bn authorisation to the Treasury Department to buy up nonperforming mortgage loans and mortgage-based securities from distressed banks.

Paulson was said to have balked at what some termed a piecemeal funding approach.

Banking industry officials warned earlier on Thursday that half-measures would not work, given the seriousness of the national financial crisis.

Marty Regalia, a former Federal Reserve Board economist who now serves as chief economist at the US Chamber of Commerce, said that in dealing with any banking financial crisis, “you have to get in front of it and stop it from getting away from you”.

“You have to provide enough money to convince people and the markets that you are going to deal with the bank run, that you have more funds available than anyone might have thought necessary,” Regalia said.  “That’s what ends a panic.”

“But this is not just a bank failure,” Regalia said.  “You’re talking about the entire US financial system. You can’t nickel and dime this.”

McConnell did not indicate if or when another White House session on the bailout might be held.

($1 = €0.68)

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