Citing danger to the national economy, the Bush administration approved an emergency bailout of the U.S. auto industry Friday, offering $17.4 billion in rescue loans in exchange for concessions from the deeply troubled carmakers and their workers.

The government will have the option of becoming a stockholder in the companies, much as it has with major banks, in effect partially nationalizing the industry.

At the same time, Treasury Secretary Henry Paulson said Congress should release the second $350 billion from the financial rescue fund that it approved in October to bail out huge financial institutions. Tapping the fund for the auto industry basically exhausts the first half of the $700 billion total, he said.

Allowing the U.S. auto industry to collapse in the middle of what is already a severe recession is not a responsible course of action, Bush said.

” It would worsen a weak job market and exacerbate the financial crisis,” Bush said. “It could send our suffering economy into a deeper and longer recession. And it would leave the next president to confront the demise of a major American industry in his first days of office.”