One day after a proposed bailout package was dealt a stunning defeat in the House of Representatives, President Bush again warned of dire consequences should the U.S. fail to act, suggesting that "the economic damage will be painful and lasting" should Congress fail to pass some sort of bailout package for ailing financial markets. "As much as we might wish the situation were different, our country is not facing a choice between government action and the smooth functioning of the free market," Bush said in a morning press conference. "We're facing a choice between action and the real prospect of economic hardship for millions of Americans." Lawmakers vowed to push ahead with efforts to pass bailout legislation; the effort to salvage the bi-partisan bill comes after members of the House rejected the proposal during a key Monday vote, by a 228-205 margin; U.S. stock markets endured one of their worst single day of losses, as a result. Global financial markets tumbled overnight, as well. Lawmakers face pressure from abroad on the bailout as well. European Commission spokesperson Johannes Laitenberger was especially critical of the failed bailout legislation, according to an RTTNews report, and said that "the U.S. must take its responsibility in this situation, must show statesmanship for the sake of their own country and for the sake of the world." In Tuesday's remarks, President Bush tried to bridge gaps with both GOP members and Democratic lawmakers hesitant to vote for the proposed legislation. "I recognize this is a difficult vote for members of Congress," Bush said. "Many of them don't like the fact that our economy has reached this point, and I understand that. But the reality is that we are in an urgent situation, and the consequences will grow worse each day if we do not act." The London interbank offered rate, or LIBOR -- used to calculated rates on $360 trillion of financial products worldwide, including adjustable-rate mortgages here in the U.S. -- soared on the heels of the Congressional rejection of the bailout proposal. Bloomberg News reported that LIBOR had climbed 431 basis points to an all-time high of 6.88 percent early Tuesday, underscoring the degree of financial distress now being felt as banks refuse to lend to each other. Christoph Rieger, a fixed-income strategist at Frankfust-based Dresdner Kleinwort, offered Bloomberg a bleak take on the market. "The money markets have completely broken down, with no trading taking place at all," he told the news service. "There is no market any more. Central banks are the only providers of cash to the market, no-one else is lending." The U.S. Treasury moved this week to implement its own federal guarantee of money market funds, saying the government backstop was needed to protect investors from "temporary dislocations in credit markets." President Bush did signal openness to revisions in the bailout proposal, suggesting that "producing legislation is complicated, and it can be contentious" and saying that "it matters little what a path a bill takes to become law." "What matters is that we get a law," he said. Read the President's full remarks >>