The US economy could grind to a halt if Congress refuses to back its $700bn financial rescue plan, the administration warned on Tuesday as it stepped up efforts to win round doubting members of President George W. Bush’s own Republican party.

At the first congressional hearing on the plan to authorise the administration to buy banks’ toxic assets, Ben Bernanke, Federal Reserve chairman, and Hank Paulson, Treasury secretary, faced scepticism from Congress over the details of the plan.

Treasury Secretary Henry M. Paulson Jr. received an angry and skeptical reception on Tuesday when he appeared before the Senate Banking Committee to ask Congress to promptly give him wide authority to rescue the nation’s financial system.

One after another throughout the session, senators from both parties said that, while they were prepared to move fast, they were far from ready to give the administration everything it wanted in its proposed $700 billion plan to buy up and hopefully resell troubled mortgage-backed securities.

Asserting that the plan would allow Mr. Paulson to act with “absolute impunity,” Senator Dodd said, “After reading this proposal, I can only conclude that it is not only our economy that is at risk, Mr. Secretary, but our Constitution, as well.”

Mr. Paulson said in response to questions that he shared the senators’ exasperation. “I’m not only concerned, I’m angry” over the events that led to the problem, Mr. Paulson said. He blamed an outdated regulatory system for the turmoil and, in an effort to counter any impression that the proposed rescue plan is for the benefit of fat-cat Wall Streeters, said: “This is all about the taxpayers. That is all we are about.”

He and Mr. Bernanke said that the problems in the housing industry were the core of the crisis but that the problems would continue to spread far outside the housing sector if the problems in the mortgage markets were not addressed, and soon.

The senators on the banking panel were unanimous in calling for ways to protect taxpayers’ investments — which at $700 billion would amount to $2,300 for every American citizen, Senator Mike Enzi, Republican of Wyoming, noted.