Washington - Battle lines were being drawn in Washington on Sunday over the US government's rescue plan for the financial industry as Democrats in Congress sought guarantees for taxpayers, help for people trying to hold on to their homes and limits on pay for executives from firms benefiting from the bailout.

The Bush administration, an ardent advocate of free market economics, is seeking unchecked powers from Congress to buy 700 billion dollars (485.5 billion euros) in bad mortgage debts to head off a disastrous credit freeze that could spell global disaster for the international finance system.

The move would be the largest intervention in capital markets since the Great Depression of 1929. Without intervention, officials have warned there would be a national and worldwide financial catastrophe, a "global meltdown." New York Senator Charles Schumer raised the spectre of "depression" if the US fails to intervene.

Treasury Secretary Henry Paulson signaled on Sunday the coming fight over the request, saying there were adequate measures in place to help struggling homeowners and that limits on executive salary as well as industry-wide regulations must wait.

"What I'm saying is, we need this to be clean and quick, and we need to get it in place," Treasury Secretary Henry Paulson said on ABC news on Sunday.

Paulson acknowledged the "frustration" of taxpayers who must watch as financial executives continue making millions while the government bails out their bad decisions.

But he warned that the priority was to stabilize the market.

"We need a lot of reforms, and this is going to be something Congress and the next administration is going to be working on for a long time," he said. "But these can't be done, and shouldn't be done, in a matter of days."

The 700-billion-dollar package compares to the 600 billion dollars already spent on the war in Iraq and even towers over annual budgets for the Pentagon and other departments of government.

Congress would have to raise the debt ceiling to 11.3 trillion dollars, after raising it in July to 10.6 trillion dollars in anticipation of the 200-billion-dollar rescue of mortgage giants Fannie Mae and Freddie Mac.

The White House says Congress must act this week, before it starts its recess on Friday to prepare for the November 4 presidential elections.

The three-page document sent to Congress includes few details, and would prevent courts from reviewing actions taken under its authority, Bloomberg financial news agency reported Sunday.

"He's asking for a huge amount of power," Nouriel Roubini, an economist at New York University, was quoted as saying. "He's saying, 'Trust me, I'm going to do it right if you give me absolute control.' This is not a monarchy."

The request comes as US President George W Bush's popularity has fallen into the 30th percentile and as both Democratic nominee Barack Obama and the Republican's own nominee, John McCain, campaign on a platform of radical change from the Bush era.

The government lurched from one crisis to another last week, standing by as Lehman Brothers investment bank declared its 600-billion-dollar bankruptcy and as Merrill Lynch investment bank was swallowed up by Bank of America. It then stepped in to rescue the insurance giant American International Group Inc (AIG) to the tune of 85 billion dollars.

Markets not only in the US but around the world fluctuated wildly but returned to about where they had been at the beginning of the week after news of the rescue package emerged.

Speaker of the House Nancy Pelosi promised that Democrats would work with the administration to ensure a "swift" response. But the majority party would also seek to reduce mortgage foreclosures, create a "fast-track authority" for an overhaul of financial regulation and to protect taxpayers.

A spokesman for Representative Barney Frank, chair of the financial services committee, said Democrats will put curbs on executive pay for companies whose assets the government will be buying.

Senate Majority Leader Harry Reid said the "American people have every right to be outraged that we are at this point" and blamed the Bush administration's "extreme hands-off policies."

But he said the consequences of inaction "could be catastrophic" and cause a "global financial meltdown" and said he was sure a compromise would be reached.

Reid also called for Bush to be frank with Americans about the severity of consequences if Congress fails to act.

Paulson, on the Sunday morning talk shows, evaded such questions, saying only that huge numbers of jobs, the integrity of retirement accounts and the ability to borrow money were all at risk.