AFTER A tentative Congressional agreement on a $700 billion plan to bail out vulnerable banks collapsed in disarray at a White House meeting on Thursday, attention centres now on whether the Bush administration can finally broker a deal before Asian markets open on Sunday night.

Although there were plenty of fine words from all sides yesterday about their determination to sign a pact, the talks have breached every previous deadline amid fraught politicking over the parameters of the plan. They will proceed throughout the weekend.

In an apparent attempt to reassure the markets that the process was still on track even after his setback in the White House, Mr Bush came quickly out of the traps early yesterday to assert that his government was determined to rise to the occasion.

“There are disagreements over aspects of the rescue plan, but there is no disagreement that something substantial must be done,” he said.

Freely acknowledging that the talks process was “not very pretty”, he stressed again the seriousness of the situation.

Raising stakes in the battle to get the deal signed, savings-and-loan institution Washington Mutual had collapsed overnight.

In business for 119 years, Washington Mutual was seized by regulators and sold on quickly to JPMorgan after consumers withdrew 8 per cent of their deposits in a matter of days.

Democrats, who hold the majority in Congress, are still more or less willing to back a plan. They want the initiative overseen by an independent board, and say it should include measures to help prevent foreclosure, limit executive pay and take equity stakes in participating banks.

There appeared to be a deal on these issues with Congressional Republicans two days ago, but it fell asunder when Republicans from the House of Representatives proposed an alternative scheme that involved a much smaller role for the government.

Given the criticism of the level of public expenditure in the Hank Paulson plan, House Republicans want to adopt a different approach to the problem under which the government would insure all mortgage-back securities, cut taxes and reduce business regulations.

For all the questions over its likely effectiveness and cost, the Paulson plan still looks like the only game in town. Thus the question now for Mr Bush is whether he can persuade recalcitrant Republicans to come on board.

Although many observers were suspicious that the unexpected intervention in the White House was linked in some way to the suspension of John McCain’s presidential election campaign, he returned to the fray last night to participate in the first debate of the campaign with his rival Barack Obama.

“It’s too late,” said a McCain adviser of the alternative Republican plan. “That’s the kind of proposal that might have been put on the table a year ago. We have a plan on the table that will work.”