WASHINGTON (AP) -- Desperate to avoid another market-crushing defeat, House leaders won key converts Thursday to the $700 billion financial industry bailout on the eve of a make-or-break second vote.

President Bush and congressional leaders lobbied furiously for the dozen or so supporters they'd need to reverse Monday's stunning setback and approve a massive rescue plan designed to stave off national economic disaster.

Anything but reassured, investors sent the Dow Jones industrials plunging another 348 points, suggesting Wall Street is expecting tougher economic times even if the measure is rushed into law. The Federal Reserve reported record emergency lending to banks and investment firms, fresh evidence of the credit troubles squeezing the country.

"A lot of people are watching," Bush pointed out -- as if lawmakers needed reminding -- and he argued from the White House that the huge rescue measure was the best chance to calm unnerved financial markets and ease the credit crunch. He was calling dozens of lawmakers, a spokesman said.

Democratic and Republican leaders worked over wayward colleagues wherever they could find them.

Rep. Steny Hoyer, the second-ranking House Democrat, said there was a "good prospect" of approving the measure but stopped short of predicting passage -- or even promising a vote. Nonetheless, the vote was expected on Friday. "I'm going to be pretty confident that we have sufficient votes to pass this

WASHINGTON (AP) -- There's no need to explain to Al Lubrano how deeply tight credit has wounded the economy.

Lubrano, president of a metal components maker in Lincoln, R.I., said orders from his customers in the automotive, computer, and telecommunications industries have "dropped precipitously" in the past six weeks.

"I'm going to have to lay people off," he said, if the economy doesn't improve.

He's not alone. The government reported Thursday that factory orders took the biggest drop in two years in August as businesses cut back on purchases of large equipment and consumers spent less on autos, electronics, appliances and other goods.

When manufacturing takes a hit, jobs get pummeled. More people than expected lined up at the unemployment lines last week, according to government data released Thursday, pushing claims for jobless benefits to a seven-year high.

There's more pain to come, predicted Lubrano, if the House doesn't pass a $700 billion plan to buy bad assets from banks and other institutions to shore up the financial industry and eventually thaw frozen lending.

Lubrano met with President Bush Thursday as part of a group of business representatives who favor the package approved by the Senate Wednesday night.

"You're going to see jobless rates shoot up like you haven't seen in years" if the package doesn't pass, said Lubrano. His company, Technical Materials Inc., has about 200 employees and is already planning to

WASHINGTON (AP) -- Banks and investment firms borrowed in record amounts from the Federal Reserve's emergency lending facility over the past week, providing fresh evidence of the credit stresses squeezing the country.

The Fed's report released Thursday said commercial banks averaged a record $44.5 billion in daily borrowing over the past week. That compared with a daily average of $39.36 billion in the previous week. On Wednesday alone, banks borrowed a record $49.5 billion, surpassing the previous high that came one day after the Sept. 11, 2001, terror attacks.

For the week ending Wednesday, investment firms drew a record $147.7 billion. That was up significantly from $88.15 billion in the previous week. This category was broadened last week to include any loans that were made to the U.S. and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch. On Wednesday alone, investment firms borrowed a record $146.6 billion, breaking the previous record set on Sept. 24.

The Fed report also showed that $122.1 billion worth of loans were made to money market mutual funds -- via banks -- to help the funds, which have been under pressure as skittish investors demand withdrawals.

And, the report showed that the Fed has loaned $61.3 billion to insurance giant American International Group. In mid-September, the Fed said it would provide the troubled company a two-year, $85 billion loan.

The report comes as Washington policymakers battle the worst financial crisis since the stock market crash