Troubled Asset Relief Program TARP

As the financial crisis deepened, Congress passed the Emergency Economic Stabilization Act, signed October 3, 2008, authorizing up to 700 billion dollars, later cut to 475 billion. Instead of buying bad mortgage assets as first planned, the Treasury mostly bought preferred stock in hundreds of banks, starting with nine of the largest in October 2008, and attached limits on executive pay and dividends. The program also funded the insurer AIG, the auto industry, and mortgage relief.

The Treasury and Federal Reserve rescue of AIG left the government owning about 92 percent of the company, and the restructuring of General Motors in 2009 gave it about 61 percent of the automaker, along with a stake in Chrysler. The government sold its last AIG shares in December 2012 and its last GM shares in December 2013. About 443 billion dollars was disbursed. The bank investments returned a profit, the auto rescue lost money, and the Congressional Budget Office estimated the program's final cost at about 31 billion dollars, mostly from housing aid that was never meant to be repaid.

TARP remains deeply controversial. Supporters, including officials of both the Bush and Obama administrations, say it prevented a collapse of the financial system and that most money was repaid with interest. Critics on the left say it rescued Wall Street while doing little for homeowners, and critics on the right say it rewarded reckless firms and created moral hazard. It was the largest government ownership of private companies in modern U.S. history until the stakes taken in 2025 revived the debate.