Canada's TSX tumbled more than 840 points after the U.S. Congress defeated a bailout plan for the financial sector Monday, and NDP Leader Jack Layton called for an all-party meeting to address the situation.

Toronto's S&P/TSX index was down 840.93 points to 11,285.07 in afternoon trading Monday, its biggest drop in nearly eight years.

Don Drummond, Chief Economist at TD Bank, told CTV's Mike Duffy Live on Monday that Canada, like many other nations, is feeling the credit crunch that has hit the U.S.

He said credit is flowing more freely here in Canada than in the U.S. but the cost of credit has gone up.

"If you've got 'bank' in your title I don't care what country in the world you're at, you are feeling this impact, just not quite as heavily as in the United States," said Drummond.

New York's Dow Jones industrial average lost 777.68 points to 10,365.45 -- its biggest point-loss in history. The Nasdaq composite index fell 199.61 points to 1,983.73 and the S&P 500 lost 106.85 to end the day at 1,106.42.

Also Monday, the Federal Reserve, the Bank of Canada and other central banks took further action to help reverse the credit crisis.

The Bank of Canada said it, along with the Federal Reserve, have agreed to expand their reciprocal currency arrangement to US$30 billion -- a jump from the US$10 billion announced Sept. 18.

Economy politics

Following the rejection of the bailout in the U.S., NDP Leader Jack Layton called for an all-party meeting because it could result in agreement on "points of common action, and perhaps an appropriate common statement."

"Our first and essential concern must to make sure that the savings, pensions, homes and jobs of ordinary working families are safe and secure," Layton told reporters.

A spokesperson for Conservative Leader Stephen Harper said there would be no such meeting and that the proper place for this kind of discussion would be the upcoming federal debates.

The NDP's Paul Dewar told CTV's Mike Duffy Live on Monday that he hopes that Harper reconsiders a meeting between all party leaders, the governor of the Bank of Canada and the deputy minister of finance to assess the situation and look for solutions.

"We've seen in the United States there has been a reach across the aisle amongst parties to look at the crisis that faces not just government, not just markets, but everyday people," said Dewar.

Conservative candidate Ted Menzies said Canadian banks are in good shape because of Stephen Harper's leadership, and there's no reason to bring in other leaders for advice.

"If he's going to bring in Jack Layton and Stephane Dion, both of whom have pretty substantially suggested they want to drive us into a recession, perhaps we don't need that sort of financial advice right now," said Menzies.

Liberal John McCallum also dismissed the suggested meeting and characterized it as "posturing" on the part of the Layton.

"The fact that (Layton) would have a $50 billion tax grab of corporate income tax, thereby killing jobs of all those people around the kitchen table suggests to me he doesn't understand economics, so I'm not sure what Jack could contribute," McCallum said.

Liberal Leader Stephane Dion released a statement on the financial fallout, saying he was "extremely concerned about the effect today's events will have on our economy and the savings of ordinary Canadians."

The statement went on to say previous Liberal governments had a type of "rainy-day" fund to deal with sudden downturns in the economy.

"That is why under Jean Chrétien and Paul Martin, Liberal governments committed to sound fiscal management, the cornerstone of which was maintaining a $3-billion contingency fund," read the statement. "A new Liberal government will return to this practice -- a prudent measure irresponsibly abandoned by the Conservative government."

The statement echoed what former Liberal prime minister Paul Martin said earlier in the day at an Economic Club of Canada meeting, that governments should stay in surplus as it's the best was to fend off a deficit.

"What you've got to do is prepare yourself for it. What does that mean? Well, it really means that you don't say, 'We're running a surplus and what a terrible thing this is' and wipe it out," Martin said.

"You say to yourself, 'You know what I'm running the surplus for, I'm running the surplus so that if I don't need it I can pay down debt, or invest in infrastructure but if I do need it I can provide the country with the temporary respite for the country to get through it.'"