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

The Wall Street bailout threatened to swamp the US election last night as John McCain abruptly left Washington to face Barack Obama in his first presidential debate, with a planned $700 billion rescue deal teetering on a knife-edge.

The Republican nominee appeared to blink first in a game of the highest stakes as he raced down to Mississippi for the debate. He had previously pledged to remain in the capital until a deal to save the banks was agreed.

The presidential campaign was overwhelmed by the turmoil raging in financial markets as America’s political leadership was stalked by the fear of failing to agree a deal — and of a voter backlash if they did agree one.

President Bush admitted yesterday that "we got a big problem" as the bailout’s prospects see-sawed.

He told Congress and rebel Republicans that they must move quickly to avert an economic catastrophe. "There are disagreements over aspects of the rescue plan but there is no disagreement that something substantial must be done," he said.

Mr Bush later held crisis talks with Gordon Brown, who assured him of Britain’s support for the bailout plan, "whatever the details". Mr McCain’s retreat from Washington came as Democrats claimed that his intervention in negotiations on Thursday had wrecked an outline deal, with a White House meeting between congressional leaders, presidential candidates and Mr Bush descending into a shouting match.

Hank Paulson, the US Treasury Secretary, was later reported to have resorted to getting down on his knees as he pleaded with Nancy Pelosi, the Democratic House of Representatives Speaker, to help him to save the deal.

But the mood on Capitol Hill may have shifted with the overnight collapse of the Washington Mutual Bank concentrating minds.

Republicans, who have pushed an alternative insurance-based scheme, insisted they were not being obstructive and Democrats talked of a deal being done before markets reopen on Monday.

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