A $350 billion blank check


FedLine noted last week that Treasury secretary Henry Paulson had spent almost half of the $700 billion allocated as part of the Troubled Asset Relief Program (or “the bailout,” as we like to call it).

The Obama administration apparently gets to spend the other half.

At a contentious House Financial Services committee hearing today, Paulson said he didn’t think spending the other $350 billion in the next two months was the best plan:

We have decided the best course of action is to preserve half of the TARP fund for flexibility, and for the next administration.

This sets up an interesting scenario for the president-elect. Will he use the remaining $350 billion to continue Paulson’s effort to recapitalize banks? Or will he shift gears, and focus on purchasing troubled mortgages, renegotiating them to avoid foreclosures, and — perhaps — using some of the money to help the ailing auto industry?


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