Paulson Flip Flops: Requests Remainder of TARP Funds

December 19, 2008 10:27 AM EST

Treasury Secretary Henry Paulson made comments this morning saying that Congress will likely need to release the remaining funds from the TARP in order to fully stabilize the financial markets. The news has much of the investment community in an uproar as Paulson has recently said that he will not ask the government for the remaining $350 billion.

With today's $17.4 billion commitment to General Motors (NYSE: GM) and Chrysler, Paulson pointed out that the first half of the TARP has "effectively" allocated the first $350 billion solely to stabilize the markets. While the Paulson comments raise concerns about whether the $700 billion TARP program will be enough to get the US out of this mess, Paulson also said that he is confident that "we have the necessary resources to address a significant financial market event."

Paulson said he will discuss possible terms of a deal with "the congressional leadership and the President-elect's transition team in the near future."

A Wall Street Journal article this morning said that in order for Congress to negotiate terms with the Treasury, top Democrats have indicated that the Treasury would need to devise a plan to help homeowners avoid foreclosure. Through it all, it appears housing still remains at the center of the disaster.

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