The Emergency Economic Stabilization Act of 2008 and Related Government Actions in Support of the U.S. Financial System

Abstract

This paper analyzes the Emergency Economic Stability Act of 2008 (the "TARP Act") and related government actions in support of the U.S. financial system during the financial crisis of 2008. It includes a chronology of events leading to enactment of the Act and examines early actions by the Treasury to implement the Act's provisions.

This paper also examines actions taken by the Federal Reserve, Treasury, and FDIC using their existing powers to resolve failing institutions, establish liquidity facilities, adopt enhanced deposit insurance and bank debt guarantees, and implement a guarantee program for money market funds, among other actions.

This paper concludes that the TARP Act was not necessary in light of actions taken by the Federal Reserve, Treasury, and FDIC under their existing powers and that confusion and ambivalence in the Congressional process of enacting the TARP Act may have added to the severity of the financial crisis.

Keywords: Emergency Ecoomic Stability Act, TARP, financial crisis, chronology, Bear Stearns, Federal Reserve, Treasury, money market fund guarantee program, FDIC, Congress, bailout