WASHINGTON — President George W. Bush summoned Barack Obama, John McCain and legislative leaders to an extraordinary White House summit, warning Americans and Congress on Wednesday night that failing to act on a $700 billion financial industry bailout could lead to "a long and painful recession."

Earlier, Bush bowed to Democratic demands to limit the pay of executives whose tottering companies would be rescued, and appeared to be softening his resistance to Democrats' demand that the eye-popping cost be phased in rather than approved all at once.

Democrats and Republicans were nearing agreement on the rescue legislation, the most sweeping government intervention in the market since the Great Depression, and set a meeting early Thursday to begin drafting a bipartisan bill.

Bush acknowledged in a prime time television address Wednesday night that the bailout would be a "tough vote" for lawmakers.

"Without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold," Bush said as he worked to resurrect the unpopular bailout package.

The president's dire warning came not long after he invited Obama and McCain, one of whom will inherit the economic mess in four months, as well as key congressional leaders to a White House meeting on Thursday to work on a compromise.