WASHINGTON, Sept 23, 2008 (AFP) - Democratic Congressional leaders insisted Tuesday that a massive bailout for the US financial system must include sweeping safeguards, even as they acknowledged the urgency of the deal.

'I'm prepared to act quickly but I'm not going to act irresponsibly. If it takes longer, so be it,' said Senator Chris Dodd, chair of the Senate banking committee where US Treasury Secretary Henry Paulson is due to testify.

'I won't give a check for 700 billion dollars for 41 days to this secretary or any secretary without safeguards built in, accountability, transparency, oversight. That's just not going to happen,' Dodd told CNN, apparently referring to the number of days left before US elections on November 4.

Dodd said he was 'angry' being faced with a crisis that was 'a preventable, avoidable situation' created by a political climate he described as 'basically an eight-year coffee break.'

'You had regulators sitting back as loans were being made with no documentation, alluring people into subprime mortgages, predatory lenders taking advantage of the situation -- that's how this all unfolded. It's not a mystery,' Dodd said.

Paulson has asked Congress to agree to a 700-billion-dollar government intervention to purchase troubled mortgage-related assets of floundering financial institutions.

In a transcript of remarks prepared for delivery to the Senate panel later Tuesday, Paulson warned that if Congress does not act quickly on the legislation, a credit crisis could threaten 'all parts of our economy.'

Subprime mortgage loans 'have created a chain reaction and last week our credit markets froze -- even some Main Street non-financial companies have trouble financing their normal business operations,' Paulson was to tell the Senate banking committee, according to a transcript of his remarks.

'If that situation were to persist, it would threaten all parts of our economy,' Paulson was to say.

'We do have to take action,' Senator Hillary Clinton told CNN early Tuesday in a separate interview, adding however that Congress was driving a 'hard bargain.'

'I think it's important that Congress is driving a hard bargain with the administration and not just saying 'Okay, we'll do whatever you want,' because we want to make sure that taxpayers have some control over the purse strings and they are not just left holding the bag of this huge bailout.'

Democrats are seeking greater oversight of the Treasury Department and the financial services market and limits on executive compensation, among other safeguards on the bailout.

'We can't just go back to business as usual and hand over 700 billion dollars of the money that people send into their government,' Clinton said.