NEW YORK (CNNMoney.com) -- President Bush used a prime-time TV address on Wednesday night to press his case for a $700 billion bailout of the nation's shaky financial system.

Bush's proposal - to allow the Treasury to buy troubled assets threatening the health of financial institutions - aims to restore confidence to the credit markets.

In the past week, short-term borrowing that businesses rely on to make payroll and cover other operating expenses has shown signs of freezing. Further problems in the credit markets could cause the U.S. economy to seize up - threatening Wall Street and Main Street alike with a loss of jobs and a severe economic downturn.

"We are in the midst of a serious financial crisis," Bush said. "Our entire economy is in danger." (Read his entire address.)

"I propose that the federal government reduce the risk posed by the troubled assets and supply urgently needed money so banks and other financial institutions can avoid collapse and resume lending."

In recent days lawmakers, economists and administration officials have used the words "crisis," "calamity" and "meltdown" to describe the possible ramifications if no action is taken.

"The market is not functioning properly," Bush said. There is a widespread loss of confidence. America could slip into a financial panic."

Sweeping move into the markets

His proposal, first unveiled six days ago, would amount to the most sweeping economic intervention by the government since the Great Depression. The high-stakes debate over it gained rapid momentum on Wednesday.

Bush has called a White House meeting for Thursday afternoon to discuss the bailout. Congressional leaders and presidential candidates John McCain and Barack Obama are expected to attend.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke have spent the past week lobbying for the Bush's proposal. They have met with lawmakers privately and been grilled on Capitol Hill on successive days.

Democrats have criticized the president for not speaking out sooner, complaining that their constituents are angry about how much money is being requested and don't really understand how Wall Street's problems would affect them.

"One measure of the gravity of an issue is presidential involvement," said House Financial Services Chairman Barney Frank, D-Mass., on Wednesday. "The absence of any presidential speech was hurting."

Lawmakers from both sides of the aisle, while acknowledging the need to take action, objected to the Treasury's proposal both for its size and for its lack of taxpayer protections. Paulson has contended the taxpayer risk is far greater by not doing something and letting the economy hit the skids.

Three pages, $700 billion

The spare, three-page proposal sent by the Treasury to lawmakers requested the authority to buy up to $700 billion in troubled assets.

Democrats want to add provisions that provide oversight; curb executive pay at companies that sell assets to the Treasury; let the government have the option of taking an equity stake in companies that participate; and require the government to encourage foreclosure prevention for the troubled loans it purchases.

After asking for a "clean" bill earlier in the week, Bush said, "any rescue plan ... should make certain that failed executives do not receive a windfall from your tax dollars."

Democrats would also like to add a provision that would amend the bankruptcy law to let judges modify filers' mortgages on primary residences, a move the lending industry has strongly opposed and which is one of the most controversial measures in the negotiations with Republicans and the administration.

Bush acknowledged the anger that Americans have expressed about his bailout plan.

"I understand the frustration of responsible Americans who pay their mortgage on time, file their tax returns every April 15 and are reluctant to pay the excess costs on Wall Street," he said. But, he added, "given the situation we're facing, not passing a bill now would cost these Americans much more later."

By investing taxpayer money in assets with underlying value, even if the market isn't yet sure what that value is currently, the government may make "much, if not all" of the money back when it resells the assets after the markets return to normal, Bush said.

Lawmakers, who were scheduled to recess for the year on Sept. 26, did not welcome the pressure to hurry and make a decision within a week of when the bailout proposal was first presented to them. Given that the negotiations are still going on, it's very possible both the House and Senate will meet next week to vote on the bill.