Paulson Seeks Second $350 Billion in Bailout Funds

Treasury Secretary Henry Paulson on Friday called on Congress to release a second $350 billion tranche of bailout funds, and said government loans to Detroit's automakers will prevent "significant disruption" to the US economy.

AP Henry Paulson

Following the White House's announcement of up to $17.4 billion in loans for General Motors , Chrysler, and Ford Motor , Paulson said in a statement that the first $350 billion of the Troubled Asset Relief Program funds was effectively exhausted.

"It is clear, however that Congress will need to release the remainder of the TARP to support financial market stability. I will discuss that process with the congressional leadership and the president-elect's transition team in the near future," he said.

The action marks another about-face for Paulson, who had staunchly resisted using the financial bailout funds to help automakers, saying this money was intended to stabilize financial institutions. He said the bill passed in October did, however, provide the Treasury the authority to support the automakers.

"Absent congressional actions, no other authorities existed to stave off a disorderly bankruptcy of one of or more auto companies," he added.

Paulson also said the Bush administration actions would put GM, Ford and Chrysler "on a path to the significant restructuring necessary to achieve long-term viability" while protecting taxpayers to the "maximimum extent possible."

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