http://news.bbc.co.uk/2/hi/business/7631321.stmHow was the rescue deal supposed to work?
US Treasury Secretary Hank Paulson would have used the money to buy up many of the dubious mortgage investments.
In return, US taxpayers would have got a non-voting stake in the banks that they rescue. So if the banks recover, taxpayers might even make a profit.
However, if taxpayers make a loss, then the rest of the financial services industry will be forced to carry some of the cost of the bail-out.
The bosses of banks that were to be bailed out would have seen limits placed on the size of their pay deals, and so-called golden parachutes - huge payments to bankers leaving a bank - have been ruled out.
On top of that, financial institutions would have had to take out an "insurance policy" against future losses on mortgage-backed securities.
And in another big departure from the original plan, there would be four agencies to monitor how the money is doled out.
How would the bail-out have affected me?
If you live in the United States, another $2,300 would have been added to your share of the national debt.
The bail-outs were expected to add up to a whopping $1.8 trillion. That's $15,000 per US household.
Without a bail-out, the economic crisis is likely to deepen.
In a worst-case scenario there could be a domino effect of banks failing around the world.
Not only would that overwhelm any systems protecting savers and investors, it could have triggered a global economic crisis, with millions of companies going out of business and tens of millions of jobs lost.
If some sort of solution can be reached, the worst of the crisis could be avoided, although it is unlikely to bring everything back to normal.
How was the US government planning to finance the purchase?
The US government had intended to borrow the money from world financial markets. The proposed legislation gave the Treasury the authority to issue an additional $700bn worth of Treasury securities.
The hope was that eventually the Treasury could sell the distressed assets back into financial markets once the housing market stabilised, perhaps making a profit on the sale.
Others were concerned that issuing more government debt, and virtually doubling the size of the budget deficit, could be inflationary.
The sale could have made the US more dependent on foreign banks, who may be the biggest purchasers of Treasury securities.