All the papers have the same story on their front page,the Times carries a picture of dark clouds over the White House as it reports that

The financial system lurched closer to a catastrophic breakdown last night after the US Congress dramatically rejected a bailout plan designed to restore confidence to paralysed banks.
Wall Street suffered one of its worst days in history. In 24 hours five banks across the West, including Britain’s Bradford & Bingley, had to be rescued to avoid insolvency.

Meltdown Monday Part 2 says the Telegraph

Amid extraordinary scenes, Wall Street’s Dow Jones index plunged by 700 points - more than six per cent - within minutes of the American Congress voting against the plans.
Although share prices partially recovered, British investors are braced for further sharp falls following a day of turmoil in which the London stock exchange suffered one of its biggest ever daily drops.

Sell sell sell says the Independent

At the end of a morning of dizzying suspense, members of the House voted the multibillion-dollar bill down by 228 votes to 205. The White House, the US Treasury and the leadership of both parties were left to ponder whether it could be revised to assuage its opponents in time for a second attempt later this week.

The Guardian says Panic hits world markets

As recriminations began, Republican leaders blamed the Democratic speaker of the House, Nancy Pelosi, for framing the crisis as a consequence of recklessness by the Bush administration. "The speaker had to give a partisan voice that poisoned our conference," said Republican leader John Boehner. This drew ridicule from Democrats. Barney Frank, chairman of the House financial services committee, said: "Somebody hurt my feelings so I'll punish the country? That's hardly plausible."

The tabloids carry the same theme,Meltdown on Wall Street says the Mail summimg up a day where

In Britain, Bradford & Bingley was effectively nationalised with a decision that will see its name wiped from the high street.
It was one of six finance giants brought to their knees, requiring either a government rescue or take-over by a larger rival.
Among the casualties was America's sixth largest retail bank Wachovia, which was only saved from extinction through a purchase by the finance powerhouse Citigroup.
And in Europe, governments in Holland, Belgium and Luxembourg joined forces to nationalise the banking and insurance conglomerate

The Sun calls it the blackest Monday and the Mirror describes a world of Pain

In Britain the Telegraph reports that

Gordon Brown has said that he will take whatever action necessary to keep Britain's financial markets stable in the wake of the rejection of the US bail-out plan

The rejection of the package took the Bradford and Bingley off the front pages but the Guardian reminds us that Taxpayers landed with initial bill for B&B rescue

The nationalisation of Bradford & Bingley is a complicated process that will initially put the burden on the taxpayer while the high street banks could end up picking up the bill for protecting customers' deposits. But Alistair Darling is hoping to reduce the burden on the taxpayer and the banks as the buy-to-let lender's customers pay off their mortgages.
The high street banks could end picking up the bill for the Financial Services Compensation Scheme that protects the first £35,000 of customers' deposits. In B&B's case this will amount to £14bn. Bank customers could end up paying higher prices for services if the banks look for ways to pass on any costs to them.

The day when buy-to-let died: How the B&B debacle brings mortgage hikes and repossessions says the Mail

The Times meanwhile reports that

Question marks are hanging over the future of some of Britain’s biggest high street names, including Hamleys, Karen Millen and House of Fraser, after the economic crisis hit an unlikely corner of the world more than 1,000 miles from the West End.
The Icelandic Government was forced to nationalise Glitnir, the country’s third-largest bank, and the ripple effect threatens to engulf nearly 20 high street brands.

Many of the papers also carry of the Have-a-go millionaire Barclays boss beaten to death

A millionaire banker has been beaten to death after intervening to save a couple being assaulted by a mob.
Frank McGarahan, 45, was out with relatives the night before his niece's christening when he saw the pair being attacked near a taxi rank.
But as he shouted at the gang of ten men to stop, they turned on him. In the fracas, he suffered a serious head injury.

reports the Mail

Meanwhile the political scene in the UK is covered,the Independent reports that

The Conservative Party's lead over Labour has dropped from 19 to 12 points, according to a ComRes poll for The Independent which provides clear evidence of a "Brown bounce".
Gordon Brown is seen as the "best in a crisis" of the two main party leaders by 43 per cent of people, with 33 per cent opting for David Cameron. Mr Brown (43 per cent) is more trusted on the economy, while 33 per cent trust Mr Cameron most.

Tories' proposed council tax freeze would bring £210 boost for middle classes reports the Times

It would be paid for from cuts to Whitehall consultancy fees and advertising budgets as well as from savings by local authorities themselves, he said, although critics attacked the move as a squeeze on local services provided by councils

The Guardian reports that

George Osborne, the shadow chancellor, tried to put himself unambiguously on the side of ordinary families yesterday by promising a two-year freeze on council tax in England and warning City bankers they would have to pay for the mess they have made in the "capitalist casino".
He also warned his party the era of excessive personal and state borrowing was over and as a fiscal conservative, his first priority would be to reduce borrowing, rather than provide upfront tax cuts.

The Telegraph says

Health and safety laws that police officers say have stopped them intervening in crimes or to save lives will be reformed, the Conservatives will pledge today.

continuing

Dominic Grieve, the shadow home secretary, will today tell the Conservative party conference in Birmingham that the way police and prosecutors have been applying the rules runs contrary to common sense

Politics in the USA also gets much coverage

Crisis derails McCain's fightback says the Independent

As the election campaign was again reduced to a sideshow, both men urged the Democrats and Republicans to reach agreement, repeating an appeal that had already fallen on deaf ears. Mr Obama delayed his appearance at a high school in Denver for an hour as he followed the drama unfolding in Washington and the subsequent stock market plunge.

adding that

it may be Mr McCain, the Republican nominee, whose campaign is in greatest peril following his extraordinary gamble last week to suspend his campaign to thrust himself into the delicate negotiations about the financial crisis.

The Guardian reports that

Palin begins three-day cramming course for crucial TV showdown

Sarah Palin was set to enter the confines of John McCain's ranch in Arizona yesterday for three days of intensive preparations ahead of her showdown against Joe Biden in this week's vice-presidential television debate. Thursday night's match in St Louis, Missouri, will bring McCain's running mate her moment of greatest national exposure since the virtual unknown joined the Republican ticket for the White House.

Other news and the Independent reports

Claims by hundreds of asylum-seekers that they have been beaten or abused by British guards during their detention and removal from this country are to be independently investigated for the first time, The Home Secretary, Jacqui Smith, has appointed Nuala O'Loan, the former Police Ombudsman of Northern Ireland, to conduct an investigation into mistreatment allegations first reported in this paper last year

The Guardian says that

State schools are increasingly "embarrassed" to talk about God, leaving a moral vacuum which has been filled by celebrity culture and the X Factor, a leading independent school head said yesterday.
Tim Hastie-Smith, chairman of the Headmasters' and Headmistresses' Conference (HMC) which represents 250 private schools, said: "The retreat of God from education has left a moral and spiritual vacuum and the breakdown of any shared value system. In our schools we have the freedom, if we choose, to fight that malaise. Not by retreating from society but engaging with the big questions in a mature and reasoned way, offering possible answers and challenges rather than the passing fads of an X-Factor culture."

The Telegraph gets back to an old topic,

Customers are having to wait nearly half an hour to be served in post offices following the closure of scores of branches, nearly six times longer than in official Post Office guidelines.

reminding us that

Ministers have told Royal Mail to close 2,500 out of 14,000 branches in an attempt to cut the network's annual subsidy by £40 million to £150m a year and stem losses running at £4m a week

The Sun is one of many of the papers which reports that

CHILD sex beast Gary Glitter has been banned from leaving Britain by a court — because he is regarded as too dangerous, it was revealed yesterday.
The shamed singer, 64, applied for leave to visit France and Spain — where the age of consent is 13.
But police experts ruled he would be a “considerable risk” to children overseas because he could not be properly monitored.

The Express reports that ONLY THE ENGLISH HAVE TO PAY FOR MEDICINE

A £13MILLION scheme to introduce free prescriptions in Northern Ireland was attacked yesterday as unfair for English patients.
Health ministers in Ulster revealed charges for medicines for all illnesses will be scrapped following similar moves in Scotland and Wales.
But the Patients’ Association condemned the Government’s decision to exclude England from the trend towards free prescriptions.

Some news from abroad and the Independent reports that

Eleven European tourists taken hostage with eight Egyptian guides were on their way home last night after surviving 10 days in some of the most benighted wilderness on the planet – an adventure that apparently culminated in a firefight in which six of their captors were killed.

The Guardian looks at the elections in Austria where the country is in crisis as far right win 29% of vote

Viennese liberals reeled from the results of an election that put the far right comfortably ahead of the mainstream conservatives of the Austrian People's party and neck-and-neck with the Social Democrats, who narrowly won the election

More elections in the Times ,Flawed victory for 'last dictator' Lukashenko as Belarus elections denounced as

Western monitors denounced the Belarussian parliamentary elections — in which all the President's men swept to victory — as flawed. “Voting was generally well conducted but the process deteriorated considerably during the vote count,” said the Organisation for Security and Co-operation in Europe (OSCE) in a statement.

Finally back to the financial turmoil and the Sun reports that

IT’S a dangerous time to be a football shirt sponsor.
First to go was Northern Rock, at Newcastle United. Then West Ham had to ditch crashed tour operator XL.
Worldwide insurance giant AIG, sponsors of Manchester United, was nationalised by the US government.
Now Bradford City’s sponsor Bradford and Bingley has been bailed out.
JJB Sports (Wigan), Britannia Building Society (Stoke), KCom Group (Hull), Garmin (Middlesbrough), Waitrose (Reading) and Cheshire Building Society (Macclesfield) are also suffering.