Paulson accepts call for oversight of $700bn bailout

The world's financial markets steadied today as the Bush administration edged closer to a deal with Congress on the $700 billion (£382 billion) bailout plan for Wall Street.

Treasury Secretary Hank Paulson was forced to back down in horse trading this morning on some of the measures to get Democrats to agree to the core of his proposals.

Key concessions by Paulson included tougher oversight for the clean-up and help for homeowners struggling to pay their mortgages.

Paulson had originally wanted carte blanche on the fund, with no congressional or judicial review of his actions. But that met a hail of protest from politicians and economists.

Congress also wanted the government to retain equity stakes in the rescued banks in an effort to gain some upside of a recovery in the firms' fortunes.

However, the widening of the rescue net to include help for homeowners could come with a bigger price tag.

That and Democrat demands for caps on executive pay in exchange for taxpayer help remained sticking points.

While Paulson has urged Congress to push through the measures rapidly to avoid further chaos, the plan has been given a largely hostile reception by politicians and economists alarmed by the lack of detail revealed.

It has even attracted ire from Republicans such as Senator Richard Shelby, a key member of the Senate Banking Committee. He has been critical of the scheme from the start, saying it is ­"neither workable nor comprehensive, despite its enormous price tag". He wants to discuss other options.

Presidential hopeful John McCain said he backs limits on executive pay. He gained unexpected support from business groups.

"If we're talking huge infusions of your money and my money, there's going to be some limitations on compensation," said Bruce Josten of the US Chamber of Commerce.

However reluctant many politicians may be, they are expected to pass the measures this week.

House Financial Services chairman, Democrat Barney Frank, who is leading negotiations in Congress, said his party would not block the package.