KEY POINTS:
Talks on a US$700 billion ($1 trillion) bailout for the US financial system degenerated into political chaos yesterday as another collapse resulted in America's biggest bank failure.
And as the US talks wavered, Australia announced it would spend up to A$4 billion buying residential mortgage-backed securities to revive a debt market frozen by the global credit crunch.
But Treasurer Wayne Swan said there was "a world of difference" between the Australian move and the US bailout.
US authorities yesterday took over Washington Mutual, America's largest savings and loan bank, which had been crippled by bad mortgages, and auctioned its deposits.
US stock futures fell by more than 1 per cent, the dollar weakened and share markets in Asia fell.
Earlier in the day, US lawmakers had appeared close to agreement on the bailout, which would cost the equivalent of US$2300 for every American man, woman and child.
But an emergency White House meeting between Congressional leaders - including presidential contenders Barack Obama and John McCain - with President George W. Bush "devolved into a contentious shouting match", according to a statement from the McCain campaign.
After the session, Congressional leaders said an agreement could take until the weekend or longer.
A group of conservative Republican lawmakers rejected Bush's bailout and proposed an alternative mortgage insurance plan.
Democrats said McCain had scuppered the expected agreement by backing this scheme. But McCain's camp said he "did not attack any proposal or endorse any plan".
- AGENCIES
