The Bush administration has asked Congress for $700 billion to bail out firms burdened with bad mortgage debt, seeking extraordinary authority as it tackles the worst financial crisis since the Great Depression.

Democratic lawmakers, who control both houses of Congress, said they hoped to approve the bailout quickly but wanted changes such as more oversight, limits on executive pay at participating firms, and assistance for homeowners.

US Treasury Secretary Henry Paulson would have sweeping powers over the massive war chest and his decisions would not be reviewed by any court, according to a copy of the draft legislation obtained by Reuters.

The government could acquire up to $700 billion in home and commercial mortgages and related assets from US-headquartered banks and other institutions over the next two years.

But even the conditions on the type of assets and the source of them could be waived by the Treasury secretary, in consultation with the chairman of the Federal Reserve, if necessary to stabilize markets, according to a statement issued late on Saturday by the Treasury.

To allow for the bailout, the US government's debt limit would rise to $11.315 trillion from $10.615 trillion.

The bailout plan follows a wrenching week that transformed Wall Street with Lehman Brothers' failure, the agreed sale of Merrill Lynch & Co and a government takeover of ailing insurer AIG.

The debt plan was hatched amid grave concerns that other major banks could collapse and that credit markets were close to freezing, threatening the functioning of the US economy.

Showing more deals may still be in the works, Morgan Stanley's  board was scheduled to meet on Saturday to consider a possible takeover by Wachovia Bank or selling a bigger stake to China Investment Corp., according to sources familiar with the situation.

Senior Bush administration officials have pressed their counterparts in Japan, Germany, Britain and other nations to establish similar rescue plans for their own troubled financial firms, The Washington Post reported in its Sunday editions.

With the House of Representatives and Senate aiming to consider it within days, aides for lawmakers from both parties were expected to pore over the hastily drafted plan all weekend.

Treasury Secretary Henry Paulson "is in effect becoming the dictator of the American financial system for a few months, subject to congressional oversight," said Wall Street historian John Steele Gordon, author of a book about the national debt. - Reuters