WASHINGTON (MarketWatch) -- The biggest financial bailout in American history hit a speed bump Tuesday on Capitol Hill as members of the Senate began to balk at quick action to pass the measure, saying such a massive proposal requires more careful discussion and consideration.

While there was no sense that the plan, authored by Treasury Secretary Henry Paulson, was yet in peril, senators suggested at a hearing with Paulson, Federal Reserve Chairman Ben Bernanke and other top regulatory officials that the measure would not be completed by the end of the week and needed extra provisions.

Senate Banking Committee Chairman Christopher Dodd said that the plan "is not going to work" in its current form. Sen. Richard Shelby of Alabama, the panel's top Republican, said the plan "is not going to be just rubber-stamped."

“ 'It (the bailout) would do nothing in my view to let a single family save a home. It would do nothing to stop a CEO from dumping billion dollars of toxic assets on the back of American taxpayers.' ” — Sen. Chris Dodd, chairman of Senate Banking Commmittee

Paulson and Bernanke urged senators on the banking committee to quickly approve the unprecedented $700 billion plan to prop up the shell-shocked U.S. financial system, saying failure to do so would risk the stability of financial markets and the U.S. economy.

Lawmakers grilled the two financial chiefs about the huge package and pressed both of them to include other elements such as aid for homeowners and caps on executive pay.

Notes of skepticism crept into the statements of congressional leaders. But many legislators were walking a tightrope -- complaining about the plan while promising to take action.

Dodd said the Paulson proposal was "stunning" in its lack of detail.

"It would do nothing in my view to let a single family save a home. It would do nothing to stop a CEO from dumping billion dollars of toxic assets on the back of American taxpayers," said Dodd.

"It is not just our economy at risk but our Constitution as well," Dodd said, because it would allow Paulson to spend $700 billion "with impunity."

Shelby complained that there had been no time to consider alternatives.

And opposition was plainly seen among the backbenchers.

Sen. Mike Enzi, R-Wyo., said the plan would cost $2,300 per taxpayer. "This committee would not be doing its job if that were allowed to happen," Enzi said.At that point, spectators in the audience of the hearing broke out in applause.

Sen. Jim Bunning, R-Ky., called the Paulson plan "financial socialism" and "un-American."

Sen. Evan Bayh, D-Ind., said the measure was so important that Congress should postpone its plan to leave town at the end of the week until "we get it right."

Overseas leaders are clearly worried about the Paulson plan.

President Bush said that he was peppered with questions about the measure as the United Nations convened in New York. He said he assured foreign leaders that Congress would pass the plan in short order.

In the financial markets, investors paid close attention to the testimony. Stocks moved in a tentative fashion in the aftermath of Monday's big losses. See Market Snapshot.

Bernanke spells out benefits

Bernanke said that criticism of the $700 billion plan proposed by Paulson overlooked a key ingredient: It is designed to avoid forcing banks to sell or value their mortgage assets at "fire-sale" prices.

In a harsher tone than he has previously used in testimony, Bernanke spelled out the benefits that would accrue when the government can buy these mortgage assets at close to "hold to maturity" prices instead of the fire-sale prices.

He also called approval of the Treasury plan a "precondition" for a healthy U.S. economic recovery and said the housing market won't recover without the credit that would be made available under it.

Banks would have a basis for valuing the assets and won't have to use fire-sale prices, and their capital won't be unreasonably marked down, he said.

Liquidity should begin to come back to the markets and uncertainty should dissipate. Credit markets should start to unfreeze, Bernanke said.

Moreover, if the assets are purchased near the true hold to maturity prices, taxpayer losses should be minimal, he said.

"Most or all of the value will be recovered over time," the central banker said, if auctions of the securities are done properly.

Officials advise not to complicate the issue

Paulson didn't come offering an olive branch to the legislators. He said that his mortgage rescue plan must be designed to hit the ground running, a clear signal that he will oppose any changes that he believes would slow down implementation.

The Treasury secretary said that he believes it has solid support from members of both parties. Paulson said that amendments to his package that would also cause controversy must be left out.

Congressional approval of the plan would "avoid a continuing series of financial institution failures and frozen credit markets that threaten American families' financial well-being, the viability of businesses both small and large, and the very health of our economy," he said. Read Paulson's testimony.

Paulson opposed a suggestion from Sen. Charles Schumer, D-N.Y., that the $700 billion be given to Treasury in tranches, calling it a "grave mistake."

Paulson also rejected a Democratic proposal that the government get equity warrants in return for the assistance, saying that it would limit participation. Treasury wants both healthy and wobbly financial institutions to participate, he explained.

In his testimony, Bernanke also came across as a strong supporter of the Treasury's plan to buy bad assets off Wall Street's books.

With global markets under "extraordinary stress," there could be "very serious consequences for our financial markets and for our economy," according to his prepared testimony.

"Purchasing impaired assets will create liquidity and promote price discovery in the markets for these assets, while reducing investor uncertainty about the current value and prospects of financial institutions." Read Bernanke's statement.

Progress has been made on the massive plan to prop up financial markets, but there are also concerns about disagreements that could stall passage.

Rep. Barney Frank, chairman of the House Financial Services Committee, said Monday that the Bush administration and Democrats have agreed to additions to the plan, including creating an independent oversight board and aid for homeowners facing foreclosure.

However, there's uncertainty over a proposal to allow the government to take an equity position in companies that participate in the U.S. program. Frank, D-Mass., said that the Treasury had agreed, but reports later Monday afternoon said the Treasury hadn't.

Tuesday morning, a White House spokesman urged lawmakers to finalize the plan this week.

"This is very much about Main Street America, and preserving the operation of these businesses," Tony Fratto told reporters. He added that the rescue will have a "very positive impact" on homeowners and the mortgage market, adding that the administration supports robust oversight.