FACTBOX: Possible steps on bailout, other policy options

WASHINGTON (Reuters) - Stunned by the U.S. House of Representatives' rejection of his $700 billion plan to buy failing bank assets, U.S. Treasury Secretary Henry Paulson hit the phones on Tuesday to try to resurrect it.

With global markets hanging in the balance, President George W. Bush also vowed to keep pushing for a solution to unclog credit markets and warned of "painful and lasting" economic damage if Congress failed to act.

With the entire House up for reelection on November 4, many Democrats and Republicans in close races voted against the bill after e-mails and calls from constituents angry at the idea of bailing out Wall Street at taxpayer expense.

Below are some actions the Bush administration and Congress could take to try to secure passage of the bill, along with options the Treasury, Federal Reserve and other agencies could turn to calm markets if the plan cannot be resurrected.

RESURRECTING $700 BILLION ASSET PURCHASE FUND

* Senate leaders who support the plan could begin to debate it early on Wednesday when members return after the Jewish new year holiday. This could put additional pressure on the House to do the same. House lawmakers return on Thursday.

* Treasury could tweak the existing plan to draw in more lawmakers from one of the parties. Because bipartisan backing is sought, that would likely mean aiming for more Republican votes. While a minority in the House, some two-thirds of Republicans voted against the bill. A top White House adviser said on Tuesday the administration hoped small changes could garner enough votes for passage.

* Lawmakers could scrap the core of Paulson's federally funded asset rescue plan in favor of a bill that relies on privately funded mortgage insurance, but that is seen as unlikely. Democratic presidential nominee Barack Obama said a move to start over from scratch would not succeed and the administration has signaled opposition to relying solely on mortgage insurance, as some House Republicans had wanted.

* Obama and Republican presidential nominee John McCain both proposed increasing the amount of deposits eligible for federal deposit insurance to $250,000 from $100,000 as a way to broaden support for the bill. Obama said the move would help small businesses and help restore confidence in the financial system, and the Federal Deposit Insurance Corp asked that the limit be raised.

* Some Republicans have called for the bill to include elimination of so-called "mark to market" accounting that requires financial institutions to write down their assets to market value, even if they do not sell them. A bank's capital reserves can seem small compared to these 'paper losses' which may cause banks to hoard cash.

* Proponents will aim to sway moderate Republicans who might flip after winning minor concessions. Members of the House Financial Services Committee would be likely targets due to their ties to Wall Street. Republicans in areas hard hit by the housing downturn, such as South Florida, California and the Southwest, also might respond to changes that aid homeowners.

* Smoothing over ruffled feathers among Republicans could go a long way toward swaying votes. Missouri Rep. Roy Blunt, the lead House Republican negotiator, blamed a "partisan" floor speech by Democratic House Speaker Nancy Pelosi for rousing enough opposition among undecided members to kill the bill.

OPTIONS FOR FED, TREASURY, REGULATORS IF BILL IS DEAD

* The Federal Reserve could cut interest rates further to try to stave off a deep recession. Its next meeting is October 28-29, but it could announce an emergency cut before then, perhaps in conjunction with other central banks. But some policy-makers remain concerned on inflation and with overnight rates already at a low 2 percent, the Fed has limited capacity for further cuts. In addition, banks saddled with bad assets may still be unwilling to lend even if rates were lower.

* The Fed will likely continue to flood credit markets with liquidity. On Monday, it dramatically increased its term loan auction capacity to $300 billion and set-up a new $150 billion loan facility for year-end. That's in addition to lending at its discount window, which hit a record $187.75 billion in the week ended September 24. In addition, the Fed is providing up to $620 billion in U.S. dollars to other central banks.

* The Treasury and the Federal Deposit Insurance Corp can continue to arrange case-by-case rescues and mergers between distressed financial institutions. Thus far, however, these actions have not restored confidence in the financial system.