(By Salman - iStockAnalyst Writer)US stocks edged lower on Wednesday on fears that Treasury plan might be derailed, delayed or at least weakened by the US lawmakers.

The Dow Jones Industrial Average lost 29 points (-0.3%), to 10,825.17. The Standard & Poor's 500 Index subtracted 2.4 points (-0.2%) to 1,185.75. However, the Nasdaq Composite Index, heavily weighted in technology and internet stocks, rose 2.35 points (+0.11%) to 2,155.68. Financial stocks were once again on focus on Wednesday.

US Federal Reserve chairman and Treasury Secretary Henry Paulson are having a hard time convincing the members of Congress about the necessity of Treasury’s $700bn mortgage bail-out proposal, also known as Troubled Asset Relief Program (TARP). The plan has come under heavy criticism from lawmakers and experts alike, who have raised objections towards the size of the bailout. Moreover, the use of taxpayer's money to rescue erring Wall Street financial bankers is being questioned at. Lawmakers including Representative Paul Kanjorski, the second highest-ranking Democrat on the House Financial Services Committee, said taxpayers don't want to rescue mortgage lenders and other financial institutions viewed as responsible for the credit crisis. John McCain, who has also suspended his presidential campaign to work with lawmakers on the issue, said that the proposal won't pass Congress in its current form. Experts also remain skeptical about the effectiveness of plan in containing the current credit crisis. It is being feared that the plan will induce further "moral hazards". The officials have also given little details about the valuation of troubled mortgages and possible limit on executive pay in the proposed plan.

Earlier, on Wednesday, Ben Bernanke once again urged the U.S. lawmakers to urgently pass the bailout plan as economy stands to face a “grave threat” from the current crisis.

Meanwhile according to reports, late Wednesday, Treasury Secretary Henry Paulson, has agreed to accept few changes in the plan, which includes putting a limit on executive pay. Further, Barney Frank, chairman of House Financial Services Committee Chairman said Paulson also "accepts the fact" that the plan will enable the government to take equity stakes in participating firms.

President Bush is supposed to address the nation at 9 p.m ET on Wednesday in an attempt to gather support for the rescue plan.

According to reports, the FBI is investigating potential fraud at mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) and insurer American International Group Inc (AIG). Lehman Brothers Holdings Inc. (LEHM) is also under scanner.

Within Financials Citigroup Inc. (C), the largest bank by asset, tumbled 5.2%.

American International Group Inc. (AIG) plunged 33.8% after the insurer said it would take the $85 billion, two-year facility from the Fed after failing to raise capital from other sources.

Troubled thrift Washington Mutual Inc. (WM) dropped 29.4% after Standard & Poor's cut its counterparty credit ratings saying WaMu could be sold off in pieces, rather than as one single entity. S&P lowered its credit rating for the second time in nine days.

Berkshire Hathaway, late on Tuesday, agreed to invest at least $5 billion in Goldman Sachs (GS). Berkshire, run by Warren Buffett, is buying $5 billion of perpetual preferred stock in the investment bank. Buffett's Berkshire Hathaway Inc. has warrants to acquire an additional $5 billion in common stock in Goldman Sachs. The investment bank turned conventional bank also plans to raise as much as $5 billion via a public offering of its common stock. Shares of Goldman jumped 6.4% on Wednesday.

Morgan Stanley (MS), which along with Goldman Sachs became a traditional bank, was down 11.16%.
Among the gainers, Pharma major Merck & Co. (MRK) climbed 1.1%.

Within Technology stocks, Oracle Corp (ORCL) gained 1.3% Apple Inc (AAPL) finished up 1.5%. Microsoft (MSFT) also advanced 1.1%.

Shares of world's largest home improvement retailer, Home Depot Inc. (HD) retreated 0.95%.
On Wednesday, the National Association of Realtors reported the resales of single-family homes and condos declined 2.2% in August to a seasonally adjusted annual rate of 4.91 million, less than analyst estimates of 4.93 million.

European Stocks settled with losses. UK FTSE finished at 5095.57, down 0.79% from previous closing. German DAX and French CAC fell 0.26 % and 0.61% respectively.

Oil extended its slide. At Nymex, Crude Oil for November delivery settled at $105.73, down 88 cents.

Disclosure: Author does not own any of the stocks discussed here.