About that other $350 billion…

ABOUT THAT OTHER $350 BILLION…. It was hard not to see this one coming.

Treasury Secretary Henry Paulson said Friday that Congress will need to release the last half of the $700 billion rescue fund because the first $350 billion has been committed.

Paulson said the use of the rescue fund to provide loans to the auto industry along with all the other rescue efforts for the financial system meant that the administration has now basically allocated the first half of the largest government bailout program in history.

He said he was confident that the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. had the resources to address a significant market event if one should occur before Congress approves the use of the second half of the rescue fund.

But it’s important for Congress to release the second half of the rescue fund “to support financial market stability,” Paulson said in a statement.

A report in Bloomberg added that Paulson’s informal request is likely to “set off a debate in Congress, where some members have criticized the Treasury chief’s management of TARP.”

That seems like a safe bet, especially in light of Bush’s creative use of fine print in the original TARP package.

I’d add, though, that this was not a formal request for Congress to release $350 billion — that has to come from the president. Paulson’s remarks, however, suggest that call to the Hill is on the way.

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