Negotiators of a historic $700 billion U.S. financial industry bailout bill say it will be effective and shield average Americans from Wall Street's bad bets.

After intense negotiations to produce an agreement on the measure before the opening of Monday's stock markets, congressional leaders and U.S. Treasury Secretary Henry Paulson emerged from the U.S. Capitol at 12:30 a.m. Sunday to announce they had crafted a tentative agreement, The New York Times reported.

"We have made great progress toward a deal, which will work and be effective in the marketplace," Paulson told reporters.

The newspaper said under the bill, U.S. taxpayers will purchase billions of dollars worth of the illiquid, or "toxic," mortgage-backed derivative securities held by Wall Street firms at the heart of the financial crisis with a goal of reselling them at a profit at a later date.

Unnamed congressional aides told the Times the deal also includes pay limits for some executives whose firms seek help and requires the government to make aggressive efforts to prevent home foreclosures.

"All of this was done in a way to insulate Main Street and everyday Americans from the crisis on Wall Street," Speaker of the House Rep. Nancy Pelosi, D-Calif., said.