A flurry of activity in Washington Thursday squashed early hopes that a deal on the $700 billion bailout was within reach as stubborn Republican opposition derailed an apparent agreement and left lawmakers poised for another marathon day of talks.

Early this afternoon, congressional leaders from both parties said the House and Senate had reached a consensus on a bailout of financial markets by Treasury Secretary Hank Paulson. But hours later, some House Republicans suggested no such deal had been reached. A late afternoon meeting with President Bush and top lawmakers ended without resolution on the proposal and sparked a partisan exchange of blame for the breakdown.

The New York Times reported that President Bush said if “money isn’t loosened up, this sucker could go down,” after the apparent deal approving the bailout collapsed. And Paulson jokingly got down on one knee to beg House Speaker Nancy Pelosi not to pull back the Democrats' support for the plan. Pelosi blamed the delays on the Republicans, who in turn, said they thought the bill was being rammed through to deny Presidential candidate Sen. John McCain any input.

The seizure of major thrift Washington Mutual late Thursday may add some incentive for Congress and the administration to reach a consensus before the weekend. 

Lawmakers thought a deal had been struck after two hours of intense negotiation among Democratic and Republican members of both the Senate Banking Committee and the House Financial Services Committee.

In hearings earlier this week, elected officials from both parties made clear that they were reluctant to appropriate the huge sum sought by Paulson and Federal Reserve Chairman Ben Bernanke without some measure of review and control over how it was used.

Several news outlets are citing top lawmakers who say the principles submitted to Treasury include the following: limits on executive compensation for the financial firms that receive assistance from the government, a provision that allows the government to take an equity stake in the firms it aids, help for homeowners who are facing foreclosure, and oversight of the bailout process. It also includes tax relief for community banks that were hard hit by their holdings in Fannie Mae and Freddie Mac.

In addition, while Congress has authorized the use of $700 billion, it does not plan to dole it all out initially, as Paulson had proposed, according to the Wall Street Journal. Instead, it will provide the money in tranches, beginning with $250 billion in funds initially, followed by $100 billion as needed. The final $350 billion installment would come in one lump sum, but the Congress will have the authority to withhold it if it decides the plan isn't working.

Senator Christopher Dodd, the Connecticut Democrat who runs the Senate committee, had said there is a "fundamental agreement" on the principles under which the $700 billion financial rescue plan would operate. He added that Congress could pass a bill within days.

Robert Bennett of Utah, the top Republican on the Senate committee, said he hoped the agreement would "bring a sense of certainty to this crisis."

Some Republicans, however, distanced themselves from the message that a consensus had been reached. "I am encouraged by the bipartisan progress," Republican House leader John Boehner said in a statement. "House Republicans have not agreed to any plan at this point."

Conde Nast Portfolio Washington editor blogger Matthew Cooper cites one House Republican who says the votes simply aren't there for the proposal in its current form. Instead, he and other members are floating an alternative proposal that would "be less of a bailout and more of an insurance guarantee for the banks."

In a somber televised speech last night, President Bush made an effective case that something needs to be done and the costs of inaction are too high. Congress pledged to have a final bill proposal by the time the markets open on Monday.

Previously, Cooper noted that the bailout would cast Bush's legacy as a big-government conservative who oversaw an extraordinary expansion of government, from the Department of Homeleand Security to Medicare prescription drug entitlements and now to a massive government intervention in the market.

The evening's speech had echoes of Bush's September 2003 address asking Congress for $87 billion to finance the Iraq war, Cooper wrote in his blog on Portfolio.com. The sum was considered staggering at the time and marked a reversal of the administration's claims that Iraqi oil revenue would pay for the war.

That figure seems almost quaint in light of the $700 billion the administration says is needed for the financial bailout.