Architects of a $US700 billion ($840 billion) bailout plan urged US lawmakers to act swiftly or face dire economic consequences as global stock markets fell for a second day on growing concern the rescue may be delayed.

Treasury Secretary Henry Paulson told lawmakers during five hours of grueling hearings on Tuesday that the bailout was ''embarrassing'' but needed to stave off a deep recession and restore confidence in markets. The US Federal Reserve was forced to inject another $US2 billion in cash into the troubled financial system.

After lawmakers scoffed at the size, lack of details and the speed the bailout they were being asked to approve, US stocks closed down about 1.5% on the lack of certainty over when and how Washington would act.

US House Financial Services Committee Chairman Barney Frank warned the plan might not pass until Monday, adding that he doubted it would clear the Democrat-controlled Congress without limits on compensation for executives of firms offloading bad assets.

The bailout, potentially the United States' biggest ever, could cost every man, woman and child in America $US2300.

''I just don't think the American public is sold,'' said David Dietze, chief investment officer at Point View Financial Services.

''I think they are skeptical of the need, and they are fearful of the cost,'' he said. ''The skepticism is that this is going to help the Wall Street financiers and do nothing for the little guy other than saddle them with a big tax bill.''

At the start of two days of hearings, Paulson and Federal Reserve Chairman Ben Bernanke urged the US Congress to act quickly or face recession, rising unemployment and more Americans losing their homes.

Meanwhile, the transformation of global finance pressed ahead as Japan's largest brokerage agreed to buy bankrupt investment bank Lehman Brothers' European arm.

US Securities and Exchange Commission Chairman Christopher Cox urged Congress to plug a regulatory hole in the $US58 trillion market for credit default swaps, insurance-like products that many say pose a systemic risk.

President George W. Bush promised in his last speech to the United Nations that markets would stabilize but faced criticism over the excesses of what some have described as a culture of greed.

'Share the outrage'

At Tuesday's often testy hearings, Paulson, a former Goldman Sachs boss reportedly worth about $US700 million, remained calm despite sharp questioning.

''I share the outrage that people have,'' Paulson said of the bailout, which would give him sweeping authority to buy the toxic mortgages that have brought global lending markets to a near-halt. ''It's embarrassing for the United States of America ... There is a lot of blame to go around.''

Senator Charles Schumer, a New York Democrat associated with Wall Street's interests, pressed Paulson on if he could take the money in installments, starting with $US150 billion.

Paulson replied bluntly, ''We need the full authority.''

''What this is about is market confidence,'' he said. ''It's a sad story, but the American taxpayer is already on the hook.''

Congress and the Bush administration are under growing pressure to act following a rising tide of US home foreclosures and loan defaults, the failure of American investment banks as well as the world's largest insurance company.

Some analysts and investors doubted whether Paulson and Bernanke can steer the world's largest economy out of its worst crisis of confidence since the Great Depression of the 1930s.

''(The) two (men) have been wrong about nearly everything since this crisis began years ago,'' said Barry Ritholtz, director of research at New York investment firm Fusion IQ. ''Why should we trust (their) judgment on the largest bailout in American history?''

Paulson said market turmoil was already spilling into the broader US economy.

Lawmakers pushed back. Christopher Dodd, the Democratic chairman of the Senate Committee on Banking, Housing and Urban Affairs, said Congress must limit executive pay for companies unloading bad assets or risk the wrath of voters.

Just weeks before the November 4 elections, when Americans will chose a new president and re-elect one-third of US senators as well as the entire House of Representatives, executive pay and golden parachutes are hot-button issues. Continued…