Hoping for swift approval from congress, the White House agreed to include mortgage help for troubled homeowners as part of the deal but remained deadlocked on other issues.

George Bush, the US president, prodded congress during the day to pass the rescue plan quickly.

He said negotiators had made "good headway" on the government's $700bn bail-out plan but also warned that "failure to act would have broad consequences far beyond Wall Street".

Al-Jazeera's John Terrett, reporting from New York City, said investors, however, were no convinced that the plan was big enough or that the proposal would be approved in time or would work.

Investors fear that the government will have to dramatically ramp up borrowing to pay for the mammoth rescue effort, an inflationary move that could further devalue the dollar and trigger another surge in commodities prices.

Matt Zeman, the head trader at LaSalle Futures in Chicago, explained that the government is "going to have to continue auctioning off a whole lot of treasuries to finance these projects, so the dollar is going to suffer".

"Right now it's fear and anxiety driving people who want tangible assets," he told The Associated Press.

US congressional leaders have endorsed the plan's main thrust, saying passage might occur by Wednesday.

But they also want independent oversight and constraints on excessive executive compensation, Nancy Pelosi, the speaker of the house, said on Sunday.

Changing landscape

Henry Paulson, the treasury secretary, has been pushing legislators to approve the proposal as soon as possible.

Monday's volatility came as the face of Wall Street continued to undergo sweeping changes, with Goldman Sachs and Morgan Stanley getting Federal Reserve approval to change their status.

Goldman Sachs and Morgan Stanley were the last surviving of the "big five" investment banks that shaped 20 years of Wall Street history after Lehman Brothers and Bear Stearns collapsed and Merrill Lynch was bought by Bank of America.
 
The move to become bank holding companies will allow the two to gain greater access to central bank funds and to open commercial banking subsidiaries or buy retail banks, meaning people can deposit money with them, greatly bolstering their resources.