After hours of discussions with President George Bush, the talks which would have seen the government buy bad debts from US banks are believed to have ended in a shouting match.
Both presidential hopefuls Barack Obama and John McCain attended the meeting at the White House, before talks broke down at 10pm.
Republicans have been accused of walking out of the negotiations by their Democrat opponents.
McCain is believed to have sided with Republican Congress members, who favour a different plan where the government offers insurance coverage on up to half of all the mortgage-backed assets in the market.
It has been reported that one half of the table will not be present when discussions resume, which is thought to be after the weekend.
Senator Richard Shelby told press today: “I don’t believe we have an agreement”.
He added that he had five pages of letters from economists at the leading universities of America voicing their concerns about Henry Paulson’s $700bn rescue plan.
He says the letters basically state that the “Paulson plan is a bad plan, it will not solve problems, it will create problems, we are rushing to judgement, that we do have stress in our financial markets but this is not the best way and that we aught to look to alternatives.”
Shelby adds that these are not his views but the views of academics from Harvard, Yale, MIT and the Chicago Business School, all of which he brought up in the meeting.
It’s not just the politicians that have been up in arms over the $700bn bail out. There have been demonstrations in New York by people opposed at US tax payer dollars being used to help out the very corporations that unsettled the economy in the first place.