INTERNATIONAL. US leaders braced for a new day of drama on Friday over an enormous financial rescue plan after White House campaign politics intruded into round-the-clock deliberations in Congress.

Republican presidential hopeful John McCain stood accused by angry Democrats of sabotaging a deal so as to salvage his electoral fortune in the 4 November election, as a renegade bloc of Republicans moved to reshape the bailout plan, surprising and angering Bush administration and congressional leaders who hours earlier announced agreement on the "fundamentals" of a deal.

At the White House meeting that included President Bush, top lawmakers and both presidential candidates, House  Minority Leader John A Boehner floated a new plan for addressing the crisis that has hobbled global markets.

Democrats accused Boehner of acting on behalf of Republican presidential candidate John McCain  in trying to disrupt a developing consensus. The new proposal also displeased White House officials, including Treasury Secretary Henry M Paulson,  who chased after Democrats leaving the meeting and and pleaded with them not to "blow up" the US$700 billion deal, according to people present at the meeting.

"John McCain did nothing to help, he only hurt the process," Senate Majority Leader Harry Reid said after White House talks Thursday.

Both of Bush's would-be successors were meant to meet on Friday at a highly anticipated debate, the first of three of this general election, but McCain was calling for a postponement to deal with the crisis on Wall Street.

The US$700-billion package seemed within reach, according to lawmakers from both sides, but then stalled at the White House negotiations and then was engulfed in new rancor at late-night discussions on Capitol Hill.

Under the alternative Republican plan, the government would set up an expanded insurance system, financed by the banks, that would rescue individual home mortgages. The government would not have to buy up the toxic mortgage-backed assets that are weighing down financial institutions.

Barney Frank, the Democratic chairman of the House of Representatives financial services committee, said talks would resume on Friday morning after the session late Thursday attended by Treasury Secretary Henry Paulson.

At an impromptu press conference, Frank brandished a single sheet of paper that he said was the sum of new Republican proposals introduced at the last minute after a week of sleepless nights in Congress.

Reflecting the unease of many Republicans at the government's unprecedented intrusion into private enterprise, the new plan called for an independent entity to dispose of bad assets, and a cut in capital gains tax.

After urging Congress to act quickly to avert a system-wide disaster in the US economy, Bush had appeared open to Democratic demands to broaden the package to hard-pressed mortgage holders on 'Main Street'.

A compromise deal had seemed in the works that would give legislators oversight of the deal's implementation and US taxpayers an equity stake in a bailed-out company, and cap the pay of executives of rescued firms.

Senate banking committee chairman Christopher Dodd earlier on Thursday emerged from talks on Capitol Hill with some top Republicans and Democrats to announce "a fundamental agreement on a set of principles." But hopes for a deal unraveled at the White House, leaving Democrats to accuse McCain of political grandstanding in response to an economy-fueled polls charge by Obama.

The meeting convened by Bush at McCain's request was a "photo op and political theatre that had nothing to do with us getting to work," Dodd fumed.

But McCain insisted Democrats had been premature in talking up prospects for a deal given the high level of Republican discontent at the Paulson plan, especially in the House of Representatives.

Backed by Richard Shelby, the top Republican on Dodd's Senate committee, McCain told ABC News "there never was a deal" and that more work was needed to get both Republicans and Democrats on side.

McCain had said he was putting his campaign on hold and rushed back to Washington to take part in the crisis talks. He also called for Friday's first presidential debate at the University of Mississippi to be put off.

Obama again rejected that call, arguing it was more important than ever for the two contenders to lay out their case to anxious US voters.

"One of us is going to be in charge of this mess in four months, and the American people I think have a right and obligation to find out where we want to take the country and what we believe," the Illinois senator said.

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

• Top news
• Business News
• Company News