WASHINGTON (AP) — After the US House voted down the Bush administration's $700 billion financial rescue plan Monday, Treasury Secretary Henry Paulson said he will "use all the tools available" to address the crisis.

Congress may yet approve the bailout proposal — possibly this week — but its defeat raises several questions: What are those tools? How much could they cost taxpayers? And, most importantly, will they work?

Below are some answers to those questions.

Q. What can the US government do, aside from the bailout plan, to address the financial crisis?

A. The Federal Reserve and the Treasury Department can keep doing what they've already done. The Fed said Monday, even before the House vote, that it would pump more money into the financial system by providing $150 billion in additional short-term loans to banks, the latest in a series of similar steps by the Fed this year.

The efforts are intended to boost bankers' confidence so that they begin to lend money again to each other, to businesses and to individuals.

The central bank could also cut the short-term interest rate it controls, which could lower rates for home buyers, car buyers and other borrowers.

Several economists think the Fed will take that step before its next scheduled meeting on October 28.

The last time the US Fed made a move between meetings was in January, when it cut rates by three-quarters of a point.

The Treasury Department, meanwhile, has already pledged this month to purchase $10 billion in mortgage-backed securities in order to remove the so-called "toxic" assets from banks' books.

But the department can't buy many types of toxic assets under the narrow authority it was given earlier this month by Congress, hence the need for the financial rescue bill.

The department has also provided an unprecedented, if temporary, government guarantee for money-market funds, similar to the deposit insurance enjoyed by commercial banks.

Q. Will any of this work? Maybe we don't need a bailout.

A. Paulson said Monday that the government's toolkit "is substantial but insufficient." Most economists agree.

They say the government's efforts so far don't address the root of the problem: that too many banks and financial institutions don't have enough money to cover their obligations due to the plunge in value of mortgages and mortgage-related securities.

As a result, banks are hoarding cash. They also don't trust each other as they worry that more financial institutions will collapse before the crisis runs its course.

"Until these guys are better capitalised, the stress in the financial markets isn't going to end," said Anil Kashyap, an economics professor at the University of Chicago Graduate School of Business.

The Fed's short-term lending programmes can only "buy time," said Barry Eichengreen, an economics professor at the University of California, Berkeley, until a more comprehensive solution is found.

Even if the Fed and Treasury could figure out more ways to goose the financial markets, they can only go so far — and commit only so much taxpayer money — before Congress will want to weigh in, experts said.

And while an interest rate cut by the Fed could lower the cost of borrowing, economists warn that it is likely to do little to address the lack of confidence that banks have in each other.

"They can't deal with the panic issue," said Diane Swonk, chief economist at Mesirow Financial.

Q. What about other agencies?

A. The Securities and Exchange Commission moved yesterday to study whether it should loosen some accounting rules, known as "mark to market," that financial industry representatives blame for exacerbating the crisis.

Under those rules, banks and investment firms are required to give a fair-market value to their assets, even if they don't intend to sell them. Banks contend the rules have forced them to take losses on mortgage-backed securities as their market values fell and that those markdowns contributed to multibillion dollar losses.

The SEC also took the unprecedented step September 19 of temporarily banning the short-selling of 799 financial stocks.

The emergency ban remains in place until Thursday but the SEC could extend it for up to 30 calendar days in total.

Short-selling involves borrowing a company's shares and selling them with the hope of buying them back at a lower price, returning the shares and pocketing the difference.

The Federal Deposit Insurance Corp., meanwhile, has the authority to take over failed banks or thrifts that are closed by their primary regulators. The agency also acts to facilitate bank acquisitions, as it did recently when the biggest US thrift,

Washington Mutual, was closed and sold to investment bank JPMorgan Chase & Co. for $1.9 billion.

The FDIC also orchestrated the deal for Citigroup Inc. to buy Wachovia Corp.'s banking operations for $2.1 billion.

Q. How much will all this cost?

A. Whether Congress passes a bailout bill or not, the taxpayer will end up on the hook for hundreds of billions of dollars, depending on how bad the crisis gets.

That's because the government's case-by-case efforts to stem the crisis have steadily added a huge amount of liabilities to its books.

The FDIC, for example, agreed to cover up to $270 billion in losses from Wachovia's loan portfolio as part of its deal with Citigroup.

The government previously committed up to $200 billion to rescue Fannie Mae and Freddie Mac, and has loaned American International Group Inc. $85 billion. That's on top of a $29 billion loan provided by the Federal Reserve to JPMorgan Chase & Co. so that it would buy Bear Stearns in March.

Most economists agree the additional expenditures will likely mean higher taxes or steep spending cuts in the next few years.