Gordon Brown arrived in Washington last night for crisis talks with George W Bush, offering support for the US government's rescue plan as the American President confidently predicted the country's political leaders would "rise to the occasion".

Gordon Brown arrived in Washington last night for crisis talks with George W Bush, offering support for the US government's rescue plan as the American President confidently predicted the country's political leaders would "rise to the occasion" and pass the Treasury's $700bn bailout.

Republican and Democrat politicians pored over the details of the proposals in a bid to get an agreement nailed down and voted upon before the markets open on Monday morning, amid hopes of staving off a deep recession that would affect the world economy.

Some analysts predicted that failure to do so would freeze the banking system completely and send shares into freefall with the FTSE losing as much as 1000 points.

Speaking at the White House, Mr Bush said the bailout plan was big because "we've got a big problem". Stressing the need for speed, he noted how the "legislative process is sometimes not very pretty but we are going to get a package passed". He added: "We will rise to the occasion. Republicans and Democrats will come together and pass a substantial rescue plan."

Earlier, in an address to the United Nations in New York, the Prime Minister called for international action to rebuild financial systems to achieve long-term stability and demanded that the "age of irresponsibility must be ended".

Last night, the Conservatives seized on the remark, branding Mr Brown a hypocrite.

As Tories gathered for their party conference in Birmingham, George Osborne, the shadow chancellor, said: "Gordon Brown has now accurately described his time in office as the age of irresponsibility'. For 10 years he presided over a debt-fuelled boom and failed to call time on debt. The age of irresponsibility has now become the age of hypocrisy."

In more signs of the impact of the credit crunch, Washington Mutual, the largest savings and loan bank in America, closed with its banking assets sold to JPMorgan Chase for £1bn.

HSBC, blaming the current economic turmoil, announced it was axing 1100 jobs worldwide; about half will be in the UK.

Central banks again poured billions of pounds into the financial system to provide liquidity for the High Street banks; the Bank of England is lending £40bn over various periods. This followed the announcement by Woolwich, First Direct and HSBC that they were raising mortgage rates as a result of the continuing volatility in the banking sector. Others are expected to follow.

Meantime, amid continuing uncertainty, the FTSE fell 2.1%, closing down 108.5 points at 5088.5, erasing all gains made in the previous session.

Hopes of securing the £380bn bailout deal were raised and then dashed on Thursday after Republicans opposed the idea of the American taxpayers being the ones to rescue the "bad guys of Wall Street ", who had caused the crisis in the first place. They came up with an alternative insurance plan so that the pain would be taken by financial institutions rather than the taxpayer.

Underlying the anxiety on Capitol Hill, Hank Paulson, the US Treasury Secretary, supposedly went down on one knee as he begged Democratic leaders not to say anything that would scupper his bailout plan.

The incident came after the unprecedented meeting between Mr Bush, Barack Obama and John McCain and US political leaders failed to reach an agreement. Last night, both presidential candidates flew to Mississippi for the first of three television head-to-heads.