THE BUSH administration, battling strident political resistance to a $700 billion bailout for the financial sector, has agreed to include provisions in the measure that would restrict top-level pay in participating companies.
In what could be a critical concession in efforts to pass the legislation into law by Friday, US treasury secretary Hank Paulson told a Senate committee that the government "must" find a way to address the remuneration issue in the plan.
"The American people are angry about executive compensation and rightfully so," he told the House Financial Services Committee, departing from prepared remarks.
"Many of you cite this as a serious problem and I agree. We must find a way to address this in the legislation, but without undermining the effectiveness of this programme."
As the US government intensified efforts yesterday to secure a deal, US president George Bush prepared last night to make a television appeal to the US public to back the controversial initiative.
Officials worked behind the scenes to build congressional support as Mr Paulson held a private meeting on Capitol Hill to canvass support for the measure from reluctant Republicans.
"I'm encouraged by the bipartisan consensus for an urgent legislative solution. We need to enact this Bill quickly and cleanly, and avoid slowing it down with unrelated provisions or provisions that don't have broad support," he said at the committee.
After a five-hour appearance before the senate banking committee on Tuesday, the meeting yesterday was seen as a final chance for Mr Paulson to secure agreement on the package in time to have the measure signed into law by Friday.
But there was renewed hostility earlier yesterday when Federal Reserve chairman Ben Bernanke, addressing the joint economic committee in congress, urged support for the plan and said the "extraordinary stress" in global markets threatened an already weak US economy.
"The intensification of financial stress in recent weeks, which will make lenders still more cautious about extending credit to households and business, could prove a significant further drag on growth," Mr Bernanke said.
Labour markets were weak and unemployment was high, he said. Despite an easing of oil and fuel prices, consumer spending was likely to be sluggish in the near term.
Senator Charles Schumer, Democratic chairman of the economy committee, said taxpayers should get an equity stake in companies that dispose of tainted assets with the government's help. "I remain puzzled by the resistance you and [ Mr Paulson] have offered to proposals ... about the need for equity being part of the process we are discussing," he said.
The plan was endorsed in strong terms yesterday by billionaire investor Warren Buffett and former General Electric chairman Jack Welch.
Mr Buffett, whose company Berkshire Hathaway concluded a $5 billion investment in investment bank Goldman Sachs on Tuesday, said the plan was "absolutely necessary" to help pull the financial system out of an "economic Pearl Harbour".
"We were very, very close to a system that was totally dysfunctional, and would have not only gummed up the financial markets but gummed up the economy in a way that would take us years and years to repair," Mr Buffett said.
The plan was "absolutely necessary to really avoid going over the precipice," he added.
Mr Welch said the economy was likely to endure "one hell of a deep downturn", adding that the first quarter of 2009 was likely be "brutal".
