The U.S. Senate undertook Tuesday to redeem the reputation of Congress, working to craft an acceptable financial rescue plan a day after the House of Representatives abrogated its responsibility in a frenzy of partisan panic.

President Bush continued to urge quick action.

“We are at a critical moment for our economy,” he said. “Congress must act.”

The president is right. The House defeated a flawed but workable bill Monday, sending the stock market tumbling. Stocks rebounded Tuesday as bargain hunters moved in, but the credit markets were still in trouble, and that is where the danger lies in the current financial crisis. Free-market hardliners and left-wing populists who wish to “punish” Wall Street for real or imagined transgressions should realize that and reassess their opposition to congressional action.

Everybody knows that banks make money by lending money, at interest. Credit, therefore, is a commodity. A lot of this lending is in what is called commercial paper, short-term transfers of cash that make it possible for business to meet payrolls, pay for inventory or make essential repairs. When the credit market breaks down, commercial paper stops flowing. Payrolls don’t get met; inventories don’t get bought and repairs don’t get made.

Without the proceeds from commercial paper, banks raise interest on their consumer loans or cut back on the number of loans they make. You can’t finance a car, but it may not make a difference, that dealership you planned to patronize may have already failed because it couldn’t get the short-term loans it needed to keep going.

When enough of this happens, banks fail. There is no Chapter 11 bankruptcy for banks. When they fail, they are liquidated. Smaller accounts are insured, but employees and stockholders are devastated, and still another source of credit is destroyed.

The stock market might well survive if the Congress does nothing; it probably will. But the credit markets could be crippled for years if something isn’t done soon. Interest rates for commercial paper have already risen to an alarming degree in the past day or two. If they go much higher, the market in commercial paper might collapse, and the ripples from that crash would be felt in every home in America.

It is natural to feel anger at the actions that brought American financial markets to the sorry state they are in. We can understand the feelings of those who say, “Let them fail.”

But if our money markets fail, we are all in peril.

The president is right: Congress must act now. It must come up with a plan that protects our endangered money markets, makes financial institutions accountable, limits the compensation of top corporate executives and restores responsible regulation, all while recognizing and safeguarding the balance of powers set forth in the Constitution.

This crisis needs to be addressed, and it needs to be addressed now. Populist anger and laissez-faire inaction won’t get the job done. Pragmatism and determination will.