Speedy Congress approval for a $700 billion plan to bail out the U.S. banking system is paramount to avoid a meltdown of the markets, analysts told CNBC on Wednesday.

But at the same time lawmakers need to make sure they ask the right questions before handing Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke a blank check, they added.

"What do you think we will be discussing on this programme if this package falls over? The answer is we will be discussing total carnage in the credit markets and potentially massive financial systemic risk," Anthony Fry of Evercore partners said.

Paulson and Bernanke were forced to defend their bailout plan in front of a US Senate Committee, as many argued that the package lacked vital details. Hearings will resume later on Wednesday.

The legislation, which would allow the government to buy bad mortgages and other troubled assets from financial institutions, has faced numerous delays, weighing on the markets.

"We are in crisis mode, and there is a real desire to see some way in which we can stabilise the markets," said Dr Herbet London, President of the Hudson Institute, who also ran as a Republican Candidate for the Mayor of New York in 1989.

But crucial questions still need to be answered, he added. "Where do you draw the line and say the Federal government can’t own Fannie Mae, Freddie Mac and AIG? It is quite extraordinary".

Treasury Secretary Paulson asked Congress to act swiftly on the $700 billion plan, which, he says, will help to ensure financial stability, while Ben Bernanke warned lawmakers that a rejection of the plan would further hurt the U.S. economy, which is already under pressure.

Political debate intensified with presidential candidates from both camps raising doubts about the Bush administration's package, and demanding conditions that could continue to stall its implementation.

"I think what McCain is going to ask for is, 'give me some guarantees, give me an understanding of what is going to happen going forward. I will obviously buy into this proposal, but I want to make sure the people who represent the free market individuals in my party are satisfied with the direction this is taking,'" said London.

John McCain, who a week ago said the economy was fundamentally sound, has also expressed worries about giving too much power to Treasury Secretary Hank Paulson.

Democratic candidate Barack Obama urged Congress to approach the bailout proposal in a bipartisan manner, and that a blank cheque shouldn't be given without oversight and accountability.

"In the case of Obama, he is probably coming out way ahead on this matter," London conceded, as Obama urged Washington to recognise that true economic recovery requires addressing not just the crisis on Wall Street, but the crisis on Main Street.