As the Lava Jato investigations have made clear, Brazil must address the roots of its systemic corruption with ambitious reforms that yield greater political accountability. Aecio Neves had been recorded asking Batista for $700,000 to pay for his defense in the "Car Wash" corruption probe. He has denied wrongdoing. If he did, a new president would be elected through a secret vote in Congress to serve out the rest of Temer's term, through 2018.
Brazil's top court opened an investigation on Thursday into the possible obstruction of justice by the president.
The court also suspended a Temer ally from the government.
Around 24 hours after an explosive report in O Globo newspaper that said Temer had been caught on tape agreeing to bribe the jailed politician, he faced eight formal requests for his impeachment. His administration has lurched from one crisis to another since he took office just over a year ago.
Brazil's share and currency markets plunged Thursday.
Brasilia (Brazil), May 19: Turmoil in Brazil politics was further escalated as President Michel Temer refused to resign from his office following the Supreme Court's approval of investigating corruption scandal allegation.
Brazil's President Michel Temer said on Thursday he will not resign, adding that a full investigation by the Supreme Court would reveal his innocence on allegations of a cover-up.
Within 90 minutes of the opening, Brazil's main Ibovespa stock index dropped 10 percent and trading was stopped for 30 minutes.
Brazil's Real currency lost 8% of its value against the USA dollar in the first half of Thursday.
Temer's combative reaction was followed shortly after by street demonstrations in Rio de Janeiro, Sao Paulo and the capital Brasilia demanding his resignation.
Globo's report said they are Temer and JBS meat-packing company executive Joesley Batista.More news: Trump denies asking Comey to drop probe, decries 'witch hunt'
More news: Novak Djokovic in Madrid Open 2017 semi final
More news: Trump administration triggers launch of NAFTA renegotiations
Neves' whereabouts Thursday were not known.
Temer admits to meeting Batista but says hush money was never discussed.
Temer's administration has been embroiled in corruption scandals since being installed in power previous year, but the Batista tape is perhaps the strongest blow to the stability of the unelected government yet, plunging the already highly unpopular executive deeper into crisis.
It is possible Cunha, who is serving a 15-year prison sentence, could reach a plea deal with authorities for a lesser sentence if he turns over information.
In the recordings, Temer reportedly endorsed the bribing of former Chamber of Deputies speaker Eduardo Cunha in exchange for Cunha's silence.
The first man then says: "You have to keep that up, see?"
Three people with direct knowledge of the investigation said the O Globo report was accurate.
JBS representatives did not respond to emails sent by The Associated Press seeking comment.
As the scandal developed on Thursday, it was reported that the main party in Temer's governing coalition, the Brazilian Social Democracy Party (PSDB), meant to leave the base of government. However, they appear to have had a falling out amid a growing investigation into corruption involving the state oil giant Petrobras.
The corruption probe has led to the imprisonment of some of Brazil's most prominent politicians and business owners.
The current allegations is not new territory for Temer, who is also accused of illegally financing his campaign during the 2014 elections.