"Congress must act," President Bush said Tuesday at the White House.
President Bush said the economic damage to the nation will be "painful and lasting" if Congress fails to pass the bailout bill and that the troubled economy is depending on "decisive action on the part of our government."
The failure of the House vote on Monday surprised Wall Street and triggered the biggest losses in stocks in years. The stock market sell-off, when measured by the broad Dow Jones Wilshire 5000 Composite Index, reflected a paper loss of $1.2 trillion.
A key rate that banks charge to lend to one another is higher Tuesday, which could make banks less likely to lend. The Dow Jones industrials were up 185 points at the 10,582 level after falling more than 777 points Monday.
President Bush said he acknowledges "this is a difficult vote for members of Congress," but he also declared, "We're in an urgent situation and consequences will grow worse each day we do not act."
"We're facing a choice between action and the real prospect of economic hardship for millions of Americans," Mr. Bush added. "For the financial security of many Americans, Congress must act."
President Bush said that administration officials will be talking with congressional leaders on Tuesday on how to keep legislation moving. Congress is on a break for the Jewish holiday Rosh Hashanah.
On the campaign trial Tuesday, presidential candidates Sens. John McCain and Barack Obama both urged Congress to redouble efforts to save the bailout and proposed increasing federal deposit insurance to $250,000 as part of it.
"The first thing I would do is say, 'Let's not call it a bailout. Let's call it a rescue,' " McCain said in a CNN interview, according to the Associated Press. The Arizona Republican added that it is the job of political leaders to give Americans both an immediate solution and a longer-term approach to the problem.
Obama issued a statement Tuesday saying lawmakers should not start from scratch as they weigh their next move and further inaction would be catastrophic for the economy and for American families.
"Yesterday, within the course of a few hours, the failure to pass the economic rescue plan in Washington led to the single largest decline of the stock market in two decades," Obama said.
The Illinois Democrat said that significantly increasing federal deposit insurance would help small businesses and make the U.S. banking system more secure as well as restore public confidence in the nation's financial system.
Meantime, a closely watched index released Tuesday showed home prices tumbling by the sharpest annual rate ever in July, but the rate of monthly declines is slowing.
The Standard & Poor's/Case-Shiller 20-city housing index fell a record 16.3 percent in July from the year-ago month, the largest drop since its inception in 2000. The 10-city index plunged 17.5 percent, its biggest decline in its 21-year history.
Prices in the 20-city index have plummeted nearly 20 percent since peaking in July 2006. The 10-city index has fallen more than 21 percent since its peak in June 2006.
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