Christmas came early this year to two failing automakers, who on Friday learned they have received the assistance they’ve so long asked for. Treasury Department secretary Henry Paulson will step into the ongoing fight relief with an announcement Friday he will use $13.4 billion in funds from the Troubled Asset Relief Program to bail out the failing automakers. General Motors Corp. is now set to receive $9.4 billion, while Chrysler Holding LLC will get $4 billion. The automakers’ bailout means Paulson has effectively handed out the last of the initial $350 billion in TARP funds. “It is clear, however, that Congress will need to release the remainder of the TARP to support financial market stability,” he said. “This step will prevent significant disruption to our economy, while putting the companies on a path to the significant restructuring necessary to achieve long-term viability,” Paulson said. President George W. Bush said he was concerned about placing the issue of failing automakers on the desk of a President-elect Barack Obama when he takes office in January. “A more responsible option is to give the auto companies an incentive to restructure outside of bankruptcy — and a brief window in which to do it,” he said. So his administration drafted the automaker bailout bill, which gained bipartisan support in both houses of Congress before dying in the midst of arguments over union compensation. “This means the only way to avoid a collapse of the U.S. auto industry is for the executive branch to step in,” Bush said. “The American people want the auto companies to succeed, and so do I.” The announcement marked a stark turnaround from Paulson’s previous statement that he would not request the additional funds — let alone use any initial TARP funds for automakers, who are outside of the TARP’s intended recipients within the financial industry. The move to back failing automakers shows either a belief it will eventually benefit the broader financial economy, or the result of pressure from the White House to do something now that Congress has failed to pass an automaker bailout bill. By now, this pattern of flip-flopping on strategy shouldn’t surprise us. Paulson in November announced he would deviate from the original intent of TARP funds — purchasing troubled mortgage-related debt to free up balance sheets and stimulate lending — in favor of investing in the capital needs of non-banks and consumer credit. “I will never apologize for changing an approach or strategy when the facts change,” Paulson told reporters in November regarding the announcement. And Paulson expressed no apology in Friday’s announcement, in which he acknowledged that, in order to receive the last $350 billion, he will have to file an extensive report regarding the planned use of additional funds. “While the purpose of [the TARP] and the enabling legislation is to stabilize our financial sector, the authority allows us to take this action,” he said. “Absent Congressional action, no other authorities existed to stave off a disorderly bankruptcy of one or more auto companies.” An additional $4 billion injection in General Motors will require Congressional approval of the remaining funds. But lawmakers have consistently said they will not dish out the second half of the TARP funds unless Paulson’s new plan comes with plans to keep homeowners in their homes. House Speaker Nancy Pelosi, D-Calif., said on Tuesday the funds were not being used properly. “It was very clearly spelled out in the initial legislation that funds would be used for mortgage foreclosure forbearance,” she was quoted as saying at a news conference by a MarketWatch report. She also urged House Financial Services Committee chairman Barney Frank, D-Mass., to draft a bill requiring the Treasury to modify loans. Although no action has been taken on such a bill, Frank has also been critical of TARP usage in the past and has said publicly there needs to be more done to prevent foreclosures. “The refusal so far to use the money [to stop foreclosures] has been a violation of the intent [of TARP] and undermines the ability to get the votes from Congress in the future,” Frank said during a recent Congressional hearing. Federal Deposit Insurance Corp. chairwoman Sheila Bair has frequently touted the success of a program her team launched for systematically modifying loans at IndyMac Bank, a California bank the FDIC took over in July. Since the program’s launch, she has urged other lenders to use it as a template.  “To date, we’ve verified incomes and completed modifications for over 7,500 loans with thousands more in the pipeline,” using the program, she said. Using IndyMac’s program as a model for a “Loan Mod in a Box” national program, Bair said 1.5 million families could avoid foreclosure using $24 billion in government financing. Given lawmakers’ urging for action on foreclosure relief, it seems Congress might be more favorable of issuing further TARP funds for Bair’s modification plan over Paulson’s intention to continue bailing out automakers. Write to Diana Golobay at [email protected].