House Speaker Nancy Pelosi announces bail-out package
US politicians have announced a $700bn deal to rescue America's financial system and end the credit crunch.
The move, backed by both Republican and Democratic leaders, allows the Treasury to spend up to $700bn (£380bn) buying bad debts from ailing banks in the US.
President George W Bush urged lawmakers to support the bill, which needs approval by both houses of Congress.
Some Republicans have voiced objections to massive state intervention in the financial sector.
The deal was announced after days of high-level wrangling between Republicans and Democrats in Congress over the content of the bill.
Both parties had vigorous objections to a proposal submitted last week by Treasury Secretary Henry Paulson that would have given him sweeping powers over how the money was spent.
His plan was prompted by a string of failures in large US financial institutions, including the government bail-out of insurance giant AIG.
If approved by the Senate and House, the revised plan will lead to the biggest intervention in the markets since the Great Depression in the 1930s.
Nancy Pelosi, the Democratic Speaker of the House of Representatives, said the agreement was "not a bailout of Wall Street", but designed to ensure pensions, savings and jobs would be safe.
Democratic Senate leader Harry Reid said the deal was a big improvement on the initial proposal.
"They wanted a blank cheque and we couldn't give them one... Now we have to get the votes."
The negotiations had lasted all weekend and were so intense that at one point Treasury Secretary Hank Paulson suffered what was described as a "woozy spell".
After senior members of Congress announced the agreement, President Bush gave his backing to the draft legislation.
He said the bill would send a strong message that the US was serious about restoring confidence in its financial markets.
"This bill provides the necessary tools and funding to help protect our economy against a system-wide breakdown," he said in a statement.
The US administration had wanted a deal to be announced before markets opened in Asia, but Asian investors appear yet to be convinced about the rescue plan's impact.
By Monday afternoon trading in Japan, Tokyo's main Nikkei 225 index was down 118 points or 0.8% to 11,776.
The fall on Hong Kong's Hang Seng was even more pronounced, down 383 points or 2% to 18,230.
No golden parachutes
The deal addresses several of the key concerns raised by both Democrats and Republicans:
The bill, called the Emergency Economic Stabilization Act of 2008, faces its first hurdle later on Monday when the House votes on it, says the BBC's Justin Webb in Washington.
It goes before the Senate later in the week.
The proposed legislation was now "frozen", said Ms Pelosi, which means critics can not strike out individual provisions that they do not like.
However, several key critics of the deal called on their fellow legislators to block it.
The Bush administration submitted its initial proposal after several financial institutions got into trouble - unable to free up the money to keep their daily business going.
The liquidity problems have not been limited to the US.