WASHINGTON — The Federal Reserve chairman, Ben Bernanke, bluntly warned reluctant lawmakers today America risks a recession with higher unemployment and increased home foreclosures should they fail to pass the Bush administration’s $700 billion plan to bail out the financial industry.

Mr. Bernanke, America’s central banker, sketched a scenario in which neither businesses nor consumers could borrow money as President Bush and top lawmakers leaders in both parties voiced hope for agreement within days on a plan to ease the crisis.

“Nobody is happy” about the bailout request, the leader of the House of Representatives’ Democratic majority, Rep. Steny Hoyer, said. Still, he spoke of possible passage of legislation by the weekend.

“Nobody wants to have to do this,” agreed the Republican leader, Rep. John Boehner. He said he was hopeful of a quick agreement, despite withering criticism from conservatives in his party, some of whom likened the plan to socialism.

With the stock market headed lower in early afternoon, the stakes were unmistakable. Treasury Secretary Paulson said Congress must pass the legislation this week.

“I understand speed is important, but I’m far more interested in whether or not we get this right,” Senator Dodd, presiding over a hearing by the Senate Banking Committee panel where Mr. Bernanke joined Mr. Paulson in appealing for quick legislation, said.

“There is no second act to this. There is no alternative idea out there with resources available if this does not work,” he said.

Mr. Bernanke’s remarks about the risk of recession came in response to a question from Mr. Dodd, who seemed eager to hear a strong rationale for lawmakers to act swiftly on the administration’s unprecedented request.

“The financial markets are in quite fragile condition, and I think absent a plan they will get worse,” Mr. Bernanke said.

Ominously, he added, “I believe if the credit markets are not functioning, that jobs will be lost, that our credit rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover in a normal, healthy way.”

GDP is a measure of growth, and a decline correlates with a recession.

Across the Capitol complex, Vice President Cheney and the administration’s budget director, Jim Nussle, met privately with restive House Republicans, some of whom emerged from the session unpersuaded.

“Just because God created the world in seven days doesn’t mean we have to pass this bill in seven days,” said Republican Rep. Joe Barton.

Added Rep. Darrell Issa, also a Republican, “I am emphatically against it.”

Mr. Dodd and other key Democrats have been in private negotiations with the administration since the weekend on legislation designed to allow the government to buy bad debts held by banks and other financial institutions.

Despite expressions of unhappiness in both parties, the prospects for legislation seemed strong, with lawmakers eager to adjourn this week or next for the elections. The legislation that the administration is promoting would allow the government to buy bad mortgages and other troubled assets held by endangered banks and financial institutions. Getting those debts off their books should bolster their balance sheets, making them more inclined to lend and easing one of the biggest choke points in the credit crisis. If the plan works, it should help lift a major weight off the sputtering economy.

Differences remained, though, including a demand from many Democrats and some Republicans to strip executives at failing financial firms of lucrative “golden parachutes” on their way out the door.

The administration balked at another key Democratic demand: allowing judges to rewrite bankrupt homeowners’ mortgages so they could avoid foreclosure.

Mr. Paulson, seated next to Mr. Bernanke at the committee hearing, objected strongly when Senator Schumer asked if $150 billion might be enough to get the program started, with a promise of more to come.

Mr. Paulson said that would be a “grave mistake” and would fail to give the markets the confidence they needed to rebound.

Mr. Paulson repeatedly fielded questions from committee members asking why taxpayers should accept the burdens of a bailout.

“You worry about taxpayers being on the hook?” he replied at one point. “Guess what — they’re already on the hook.” Mr.Paulson suggested that the fallout from the credit crisis was so dire it would hit people in their pocketbooks unless forceful action were taken. Moreover, the flawed and outdated regulatory system, which didn’t catch abuses, needs to be overhauled, he said.

Despite the unresolved issues, President Bush predicted the Democratic-controlled Congress would soon pass a “a robust plan to deal with serious problems.” He was speaking to the United Nations General assembly.

Stocks held steady in pre-noon trading on Wall Street as Mr. Paulson told senators that quick passage of the administration’s plan is “the single most effective thing we can do to help homeowners, the American people and stimulate our economy.”

But even before Mr. Paulson could speak, lawmakers expressed unhappiness, criticism of the plan and, in the case of some conservative Republicans, outright opposition.

The panel’s senior Republican, Senator Richard C. Shelby, was even more blunt. “I have long opposed government bailouts for individuals and corporate America alike,” he said. Seated a few feet away from Paulson and Bernanke, he added, “We have been given no credible assurances that this plan will work. We could very well spend $700 billion, or a trillion, and not resolve the crisis.”

Senator Jim Bunning, also a Republican, added, “This massive bailout is not a solution. It is financial socialism and it’s un-American.”

But Mr. Bernanke said action by lawmakers “is urgently required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy.”

A third witness, the Securities and Exchange Commission chairman, Christopher Cox, urged Congress to regulate a type of corporate debt insurance that figured prominently in the country’s financial crisis.

“I urge you to provide in statute the authority to regulate these products to enhance investor protection and ensure the operation of fair and orderly markets,” he said. The debt insurance is known as credit default swaps.

So far this year, a dozen federally insured banks and thrifts have failed, compared with three last year. The country’s largest thrift, Washington Mutual Inc., is faltering.

America has taken extraordinary measures in recent weeks to prevent a financial calamity, which would have devastating implications for the broader economy. It has, among other things, taken control of mortgage giants Fannie Mae and Freddie Mac, provided an $85 billion emergency loan to insurance colossus American International Group Inc. and temporarily banned short selling of hundreds of financial stocks.