With the economy on the brink and elections looming, Congress approved an unprecedented $700 billion government bailout of the battered financial industry on Friday and sent it to President George W. Bush who quickly signed it.

House OKs Bailout | Bad Economy | Save Money

The government "acted boldly" to prevent the Wall Street crisis from spreading, Bush said shortly after the vote, although he conceded, "our economy continues to face serious challenges."

Underscoring that somber warning, the Dow Jones industrials, up more than 200 points at the time of the House vote, ended the day down 157.

The final vote, 263-171 in the House, capped two weeks of tumult in Congress and on Wall Street, punctuated by daily warnings that the country confronted the gravest economic crisis since the Great Depression if lawmakers failed to act. There were 58 more votes for the measure than an earlier version that failed on Monday.

House Speaker Nancy Pelosi, D-Calif., said the bill was needed to "begin to shape the financial stability of our country and the economic security of our people."

Treasury Secretary Henry Paulson pledged to begin using his new authority quickly, and Federal Reserve Chairman Ben Bernanke said the central bank would work closely with the administration.

Wall Street welcomed the action, but investors also were buffeted by a bad report on the job market. The Labor Department said employers slashed 159,000 jobs in September, the largest cut in five years and further evidence of a sinking economy.

At its core, the bill gives the Treasury Department $700 billion to purchase bad mortgage-related securities that are weighing down the balance sheets of institutions that hold them. The flow of credit in the U.S. economy has slowed, in some cases drying up, threatening the ability of businesses to conduct routine operations or expand, and adversely affecting consumers seeking financing for mortgages, cars and student loans. Some state governments have also experienced difficulty borrowing money.

Enticing Tax Breaks

Virtually all the tax breaks added to make the bill more palatable to the House already exist. But many expired Jan. 1. Others will expire in three months.

The largest group of beneficiaries is about 20 million mainly upper-middle income taxpayers. Without congressional action, the Alternative Minimum Tax, or AMT, would add about $2,000 in taxes this year for people mostly earning under $200,000 a year. It originally was supposed to affect only the very rich.

Thousands of businesses are anxiously awaiting renewal of the research-and-development tax credit.

Still, the outcome is far from assured. Vote-counters in both parties need to come up with a dozen or so supporters to reverse Monday's stunning defeat of the $700 billion measure.

Fallout Reaching Main Street

The financial system rescue plan may save parts of the financial industry, but it's not likely to help hundreds of thousands of homeowners who are behind on their mortgages avoid foreclosure.

It only requires the Treasury Department to "maximize assistance for homeowners," and to write up monthly progress reports.

It's estimated that within 12 to 18 months, about 40 percent of U.S. borrowers will owe more on their mortgages than their homes are worth. That's almost the same number of American households that are spending 30 percent or more of their income on housing, according to the U.S. Census Bureau.

And as Congress considers the rescue plan, some consumer advocates are upset that it would help the same Wall Street banks that gave funding for the explosion of subprime loans -- without any definitive relief for homeowners.

Even if the government were to push aggressive efforts to modify troubled loans, it could take months to put such an effort in place.

Meanwhile, current financial turmoil is also hitting stores nationwide.

In order to attract more shoppers, they've posted sale signs on everything from fall sweaters to furniture, and are getting out the Christmas goodies even earlier than last year.

One industry analyst said holiday items are already starting to flow into stores and are expected to be discounted immediately.