US TREASURY Secretary Hank Paulson was last night engaged in frenetic efforts to revive the $700 billion bailout plan for the financial sector after Congressional rejection of the measure prompted the biggest one-day drop in the Dow Jones index of leading US stocks.
Amid suggestions from some Congressmen that legislators will try to stitch together a new compromise plan for a vote on Thursday, Mr Paulson said a comprehensive plan was urgently required because the toolkit currently available to him was "insufficient".
"We need to put something back together that works.
"And, as you heard me say, we believe that our plan that we developed with the Congressional leaders and worked so hard, is a plan that works, and we need a plan that works," said Mr Paulson at the White House.
"We need it as soon as possible and we're committed to working with Congressional leaders to get it done."
The worst slump in US markets since stock market crash of October 1987 left major banking stocks in the red while smaller institution shed significant value after Wachovia's branch network was sold to Citigroup, whose own shares declined 12 per cent.
JPMorgan Chase fell 15 per cent, Bank of America lost 18 per cent and Goldman Sachs and Morgan Stanley lost more than 13 per cent.
Among smaller lenders, National City of Ohio saw its shares lose 63 per cent. Another Ohio lender, Fifth Third, lost 44 per cent of its value and Sovereign Bancorp of Philadelphia fell by 72 per cent.
"There's been significant turmoil in our financial markets in the last few days, including the collapse of Washington Mutual and Wachovia here and the failure of two major financial institutions in Europe," Mr Paulson said.
"Markets around the world are under stress and that reduces the availability of credit that businesses around America depend on meet payroll and to purchase inventories.
"Families too feel the credit crunch because it becomes more difficult to get car loans or a student loan.
"I am my colleagues and the Fed and the SEC continue to address the market challenges we are facing on a daily basis.
"I have committed to continue to work with my fellow regulators to use all the tools available to protect our financial system and our economy."
Asked whether he hoped to table again something close to the original plan, he said the legislation rejected yesterday "did the job" and "gave us the tools we needed" to protect the financial market.
"Our toolkit is substantial but insufficient. Therefore I will continue to work with Congressional leaders to find a way forward to pass a comprehensive plan to stabilize our financial system to protect the American people by limiting the prospects of further deterioration in our economy.
"We've got much work to do and this is much too important to simply let fail." Mr Paulson also said the U.S. banking system was holding up well nonetheless.
