Press reaction to bailout | UK banks could benefit | US critics gloat | Gerard Baker

President Bush today acknowledged "we got a big problem" as the political wrangling over his proposed $700 billion bailout for Wall Street continued to threaten the measures.

The plans, which pulled the world's stock markets back from a freefall last week when they were announced, have been in serious doubt after Republicans on Capitol Hill refused to back them last night.

Nevertheless hopes rose again today after Republican and Democrat leaders signalled they were close to a deal.

The optimism was bolstered by news that Republican presidential candidate John McCain had decided to break off from the negotiations to attend a televised debate with his rival Barack Obama in Oxford, Mississippi.

His campaign team confirmed the decision had been taken after "significant progress" toward a financial sector bailout had been made.

"Mr McCain is optimistic that there has been significant progress toward a bipartisan agreement now that there is a framework for all parties to be represented in negotiations," the statement said.

The move came as Roy Blunt, a Congressman from Missouri, was named as the designated negotiator for House Republicans on the bill going forward. Earlier they had told the White House they could not support the plan, pressing instead for an insurance-based alternative that would involve a smaller role for the Government.

Over the day key figures from both parties expressed cautious optimism about the possibility of reaching agreement.

Barney Frank, the Democrat chair of the House Financial Services committee and a key figure driving the $700 billion Wall Street bailout, told The Washington Post that a deal on the plan can now be reached "within a few days," now that the House Republicans were back at the table.

Before stepping back into the negotiations, House Republican leader John Boehner told the reporters this afternoon: “Our goal in attempting to come to an agreement is protecting the American taxpayers. There are a lot of options on how to do that. There are a lot of proposals out there that will work.”

Earlier in the day President Bush had made a terse statement outside the White House in which he once again urged Congress to "move quickly" to resolve a crisis that threatens to rock the world economy to its foundations.

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