Troubled Asset Relief Program
Troubled Asset Relief Program
Leroy Shepherd Jr.
Webster University
Basic Finance for Managers
BUSN 5200
Instructor, David Fish Ed.D
March 21, 2012
Troubled Asset Relief Program The Troubled Asset Relief Program as part of the Emergency Economic Stabilization Act was an initiative signed into law on October 3, 2008 by then President George W. Bush. TARP authorized the U. S Treasury to purchase up to $700 billion in assets and securities from financial institutions in a response to a potential financial crisis and to stabilize the U.S financial markets. The big picture financial system of the nation is configured in such a way that it acts as the channel between corporations and individuals. Essentially the financial system is the system that enables lenders and borrowers to exchange funds. This is a process that takes place at all levels. Individuals, banks, insurance companies, and all manner of financial companies are borrowers and lenders to some degree. The ability of money to generate money is accomplished by taking deposits from other sources and lending them out at higher rates than the borrowing rates. This has become the basics of the U S economy. If for any reason the ability to continuously conduct these types of transaction were to be threatened, slowed or stopped the economy itself would suffer significantly and possibly halt as a result. This paper purposes to explore the circumstances within the U.S financial market that led to the apparent need for this initiative, it also purposes to examine the intent of this bill, and additionally what impact has it had on the financial system and economy to date. The Need for Troubled Asset Relief The need for such a massive imitative on behalf of the nation may have roots to some degree in the deregulation of the financial services industry. “Congress passed the Financial Services Modernization Act of 1999, also known as the Graham-Leach-Bliley Act. This act brought
Leroy Shepherd Jr.
Webster University
Basic Finance for Managers
BUSN 5200
Instructor, David Fish Ed.D
March 21, 2012
Troubled Asset Relief Program The Troubled Asset Relief Program as part of the Emergency Economic Stabilization Act was an initiative signed into law on October 3, 2008 by then President George W. Bush. TARP authorized the U. S Treasury to purchase up to $700 billion in assets and securities from financial institutions in a response to a potential financial crisis and to stabilize the U.S financial markets. The big picture financial system of the nation is configured in such a way that it acts as the channel between corporations and individuals. Essentially the financial system is the system that enables lenders and borrowers to exchange funds. This is a process that takes place at all levels. Individuals, banks, insurance companies, and all manner of financial companies are borrowers and lenders to some degree. The ability of money to generate money is accomplished by taking deposits from other sources and lending them out at higher rates than the borrowing rates. This has become the basics of the U S economy. If for any reason the ability to continuously conduct these types of transaction were to be threatened, slowed or stopped the economy itself would suffer significantly and possibly halt as a result. This paper purposes to explore the circumstances within the U.S financial market that led to the apparent need for this initiative, it also purposes to examine the intent of this bill, and additionally what impact has it had on the financial system and economy to date. The Need for Troubled Asset Relief The need for such a massive imitative on behalf of the nation may have roots to some degree in the deregulation of the financial services industry. “Congress passed the Financial Services Modernization Act of 1999, also known as the Graham-Leach-Bliley Act. This act brought
References: