WASHINGTON - US TREASURY Secretary Henry Paulson vowed on Monday to keep fighting for an economic rescue plan after lawmakers rejected a compromise bailout, warning: 'This is much too important to simply let fail.'

'I will continue to work with congressional leaders to find a way forward to pass a comprehensive plan to stabilise our financial system and protect the American people by limiting the prospects of further deterioration in our economy,' he said after talks with US President George W. Bush.

Warning that 'markets around the world are under stress' and the US public was feeling the pinch, Mr Paulson said US regulators would use their existing powers to ease the pain but warned that would not be enough.

'We have significant tools in our tool kit, but they're not sufficient, and so we're going to continue to work with what we have, until we get from Congress what we need,' he said.

Mr Paulson spoke outside the White House after the US House of Representatives voted 228 to 205 to reject a compromise plan that would have pumped to up US$700 billion (S$1 trillion) to help troubled Wall Street firms, as Republican foes of the bill and rebel Democrats combined to doom the bill.

'I'm very disappointed in today's vote. But leaders on both sides of the aisle have worked very hard. I've spoken to them, and I know they share my great disappointment,' he said.

'I'm going to be continuing to consult with congressional leaders to find a way forward to get something done as soon as possible. We need to get something done,' he said.

Despite some high-profile bank failures, Mr Paulson said that the US banking system 'is been holding up very well, considering all of the pressures.' -- AFP