The question now: Will it work?

— -- They met. They argued. They wheeled and dealed.

Now Congress has a tentative agreement on how to bail out the nation's financial system, and leaders are promising approval by midweek.

The $700 billion question: Will it work?

If all goes well, U.S. taxpayers will pour billions into shaky securities, many held at tottering financial institutions. Market demand for those securities has evaporated, as financial companies now deal with the fallout from bad bets during the housing run-up that ended two years ago. The government could recoup its money, if the market stabilizes and the government eventually can find buyers.

"In theory, it is an elegant answer to an immediate problem," says Mark Zandi, chief economist at Moody's Economy.com. "It'll settle the markets, quell the panic."

If all doesn't go well? The government will have wasted billions of dollars at a time when the money could have been put to better use elsewhere — or saved. "This is too much money in too short a time going to too few people," with too many questions unanswered, says Rep. Dennis Kucinich, D-Ohio.

At the heart of the deal, reached in negotiations among congressional leaders and Treasury Secretary Henry Paulson over the weekend, is a promise to spend up to $700 billion to buy the toxic securities that are freezing the nation's banking system and threatening to cause a meltdown of the nation's financial system.

These securities, backed by questionable mortgages on overpriced properties, have plunged in value. In many cases, there aren't any buyers. In one of the few recent public sales of mortgage-backed securities, Merrill Lynch accepted about 22 cents on the dollar.

Commercial banks, investment banks, hedge funds and other financial institutions worldwide have seen huge losses from subprime securities — and will see more if they have to dump their holdings on the market. Because of those losses, credit markets are paralyzed.

Many companies can't get loans at all, and even highly creditworthy firms have to pay much higher interest rates than usual on their loans. Ultimately, the credit crunch could force companies to shut down in a wave of defaults and bankruptcy, slamming the economy into a severe recession.

But some doubt even this premise, argued forcefully by Paulson and Federal Reserve Chairman Ben Bernanke in hearings on Capitol Hill last week. Rep. Ted Poe, R-Texas, for example, says he's worried that Congress, in backing the rescue bill, will be falling victim to scare tactics. "The Y2K scare was just a mythical hoax, and that's the way this is," Poe says, a reference to the unfounded fears that world computer systems would melt down on Jan. 1, 2000.

And others just don't see spending taxpayer money on companies that have made big mistakes. "I think you need to let these companies fall on their swords," says Richard Dotson, 55, of Roscommon, Mich. The bailout "is only putting a Band-Aid on a stab wound."

But most analysts agree that Paulson and Bernanke have good cause to be worried. "Without passage" of the bill, there would be "a very long and severe recession," Zandi says. "With passage, (the recession) will be painful, but in the historical scheme of things, it will be relatively mild."

Even those who agree a bailout is needed have big questions about whether this bill will help. Among the concerns:

•It won't address the nation's underlying economic problem. Michael Zweig, professor of economics at State University of New York-Stony Brook, says there will be more than 1 million more homeowners facing foreclosure in the coming years as their loans' variable rates rise. "Everyone is looking at what's going on on Wall Street as if the problem with foreclosures is behind us," he says. "It is not."

Negotiators dropped a plan by Sen. Richard Durbin, D-Ill., that would have given judges power to restructure mortgages during bankruptcy proceedings. House and Senate dealmakers also killed a Democratic proposal to use a share of any potential profits from asset purchases and sales to set up an affordable housing fund. Republicans complained it would aid liberal community groups.

•Itmay not boost the economy enough. Even if the bailout bill calms financial markets, it may not help the economy, says Brian Bethune, chief U.S. economist for Global Insight. "All this does is build a temporary bridge from now to the point when the economy is going to be in recovery," Bethune says. "Unless the underlying fundamentals of the economy improve, this bridge will just collapse."

•The government could get gouged. How much will the government pay for the shaky securities that financial institutions want to sell? The government might have to pay too much for the assets to get firms to participate, says David Smith, associate professor of commerce at the University of Virginia.

•Velocity. Many people object to how quickly Congress has dealt with the largest government bailout program since the Great Depression. "This plan is going to affect the economy and the political system for decades to come, and we're racing to do this in a matter of hours," says Alex Tabarrok, associate professor at George Mason University and director of research at The Independent Institute. "It's overstated to think the world is going to end in 24 hours. We ought to take our time."

Since the start of the credit crunch last year, Wall Street has watched some of its biggest names disappear or cease to be independent entities: Countrywide Financial, IndyMac Bank, Bear Stearns, Freddie Mac, Fannie Mae, Lehman Bros., Washington Mutual. No major stand-alone investment bank remains in the USA. The Standard & Poor's 500-stock index has plunged more than 20%, making it an official bear market. A money market mutual fund, Reserve Primary fund, has seen its share price fall below $1 a share — the first time ever for a money fund available to the general public.

"The No. 1 issue in the economy and the No. 1 issue in our industry today is the credit crisis," says Mike Jackson, CEO of AutoNation, the country's largest auto dealer network. "It's the lubricant that drives the global economy. It's freezing up at the moment. The situation is getting worse."

Already, the government's actions have helped calm Wall Street and the public. The Treasury's notice that it would guarantee money market mutual funds, for example, seems to have slowed redemptions from the vital $3.5 trillion industry. "It's given the market a lot of confidence," says Deborah Cunningham, chief investment officer at Federated Investors.

The bill's supporters also say:

•The cost could be far less than $700 billion. The compromise plan would release $250 billion immediately, after which Congress would have more say about when and how the rest of the $700 billion would be tapped.

Because taxpayers would get equity in businesses that turn to public support, the program could get significant returns when those businesses turn around. And depending on what the government pays for the securities it buys, the government also could profit when it ultimately sells those assets.

•It could stop a flood of bank failures. If the government were to simply let banks fail, taxpayers still would be at risk because of federal deposit insurance.

One provision in the proposed legislation, for example, would allow banks to take a tax write-off on losses from the estimated $15 billion to $30 billion in preferred stock they hold from mortgage giants Fannie Mae and Freddie Mac. Those write-offs will "perhaps save more than a dozen banks from being close to failure," said Camden Fine, president of the more than 5,000-member Independent Community Bankers of America.

•Mortgage rates could fall. Typically, mortgage rates float about 2 percentage points above the yield on the 10-year Treasury note. Currently, the average 30-year mortgage rate is 6.09%, vs. 3.86% for the 10-year T-note yield, a 2.23-percentage-point difference.

The spread between the two yields already had fallen as hopes of a government bailout rose. Should the difference between the two rates return to normal — and stay there — investors will have some indication the bailout is working.

•Squeezed homeowners will get some relief. The bill requires the Treasury to modify troubled mortgages when possible. And it offers some tax relief, too. Under current law, if a bank forgives a part of a homeowner's loan in a "work-out" deal, the homeowner wouldn't owe taxes on the amount of debt that has been forgiven. The rescue bill would extend that tax amnesty for debtors.

Paulson said late Sunday that he's pleased with the compromise solution.

"The key to this, and the ultimate taxpayer protection, is having this work — instilling confidence in financial markets, stability in the financial system," he said. "If it doesn't, it's the taxpayers who pay."

Contributing: Anna Bahney, Mindy Fetterman