The US economy could grind to a halt if Congress refuses to back its $700bn financial rescue plan, the administration warned on Tuesday as it stepped up efforts to win round doubting members of President George W. Bush’s own Republican party.

Goldman Sachs is raising $7.5bn in capital, including $5bn from Warren Buffett’s Berkshire Hathaway, and another $2.5bn through the sale of common stock to other investors, the bank said late Tuesday. The boost in equity comes one day after Goldman...