Troubled Asset Relief Program

On February 17, 2009, the American Recovery and Reinvestment Act was instated. This fiscal plan was created to stabilize the economy while it was spiraling down out of control. At the time, the United States was experiencing many economic problems and was very close to a collapse. The American Recovery and Reinvestment Act was created by Barack Obama to save 900,000 to 2.3 million jobs. The plan asked for 800 billion dollars but had to be approved by congress first. This plan tried to end the breakdown of the economy and boost it back up to its normal level of performance if not better.

On November 4, 2008, candidate Barack Obama was elected for the first term of his presidency. The following February, The American Recovery and Reinvestment Act of 2009—or the ARRA—was signed into effect by congress, and made into law by President Obama on February 17, 2009. This stimulus package was originally proposed to be 816 billion dollars, but was eventually raised to be 840 billion dollars in 2012. The purpose of this bill was to inspire confidence in the American people that the economy would be up and running again. The ARRA was intended to give money back to small businesses as well as the American families who ran and worked at these businesses. This varies from TARP, or the Troubled Asset Recovery Program, which was a bill that was aimed at bailing out banks in October 2008. TARP worked to allow banks in danger to participate in reverse auction, in order to sell their assets.

amount of TARP funds. This was followed by media on the company’s allocation of resources

A survey of 37 economists conducted by the University of Chicago in 2014, for example, found that nearly all believed that without the stimulus, the unemployment rate would have risen higher than it did.” In addition to this, President Obama strategized new regulations to protect consumers and to prevent another financial crisis. In 2009 and 2010, he signed the Credit Card Accountability Responsibility and Disclosure Act, the Dodd-Frank Wall Street Reform and the Consumer Protection Act into law. The CCARD Act restricted and obligated interest rates on credit card companies and obligated them to enact transparent policies. The Dodd-Frank created the Financial Stability Oversight Council and the Consumer Financial Protection Bureau which could disintegrate banks if it was possible to fail for any reason including but not limited to subprime loans.

The American Recovery and Reinvestment Act of 2009, otherwise known as the Stimulus Bill, was one of the first major pieces of legislation passed by the new Democratic Congress in 2009 and signed by newly inaugurated President Barack Obama. The legislation was an attempt to take the United States economy out of a major recession through federal spending. The motivation for this bill was the collapse of the housing market bubble and the mortgage crisis. A result of these problems was the decline of consumer and corporate credit, causing monetary liquidity in the economy. Obama argued that the economy needed a “jump-start” to get moving again; that being the stimulus of 2009. Drafts for the bill called for as little as $275 billion in spending,

People believe the American Recovery and Reinvestment Act or ARRA had a centralizing effect, yet there are motives that support, as well as some that oppose the act. The act is sometimes referred to as The Stimulus or The Recovery Act. The United States Congress in February of 2009 passed this Act and it was signed in the same month, by President Barack Obama.

Many house republicans felt that a stimulus package would not fix the root of the problem. (Hornick, Fitzpatrick, Steinhauser, Constantini ,2010). According to Investopedia (2010), a stimulus package is a package of economic measures put together by the government to stimulate a weak economy by creating jobs and boosting spending. The theory behind the appropriateness and effectiveness of implementing stimulus packages is rooted in Keynesian economics, which reasons that the fallout from a recession can be minimized by increasing government spending (Investopedia,

After the crash of the market in 2008, Obama created the American Recovery and Reinvestment Act. The act was an “economic stimulus package”(Amadeo). The act would cost $787 billion. The act was meant to help families and small businesses instead of big business so that people in the United States could put trust into the system again which could stimulate spending and growth. For the purpose of stimulating demand, $260 million was put into cutting taxes, tax credits, and unemployment benefits (Amadeo). This included things like tax credit for first-time homebuyers, college tuition, and extended unemployment benefits. Stimulating demand and trust from the people was the biggest fitting puzzle piece of the stimulus package. The only way for an economy to flourish is when people get extra money that they can spend which would create growth in consumer

These losses necessitated governmental action in the financial markets. Companies such as Lehman Brothers and Bear Stearns lost all of their stock’s value and were forced into bankruptcy. This risk spread throughout the American banks, forcing the American government to step in and buy all of the securitized, troubled assets from the balance sheets of

The article "Troubled Asset Relief Program" showcases the recent effects of the program and what precautions the Department of Treasury should take in response. The article was most likely written by an employee from the U.S. Government Accountability Office (GAO). Their reason for writing this article can be analyzed by their tone, word choice, and audience. With this in mind, the first thing to look at is who the author is.

Observers of failed economic stimulus packages have developed a fear that these large sums of funding will be mismanaged and therefore will not be able to stimulate the economy (“History of Government Spending,” n.d.).

When the stock markets crashed everyone rushed to the banks to cut out loans. Now when everyone is taking out money banks started losing money causing them to fail completely. Then after the banks crashed the farms that ran most of Americas food supply also failed causing there to be less plants. Now less plants caused the soil to be very loose then the winds picked up and then the dust bowl happened. The article states "Once the market crashed, people rushed to banks to withdraw their money, worried that it would disappear if they left it there. But the banks now had no money to give—or lend—and as businesses failed. This proves that where the past condemns to repeat itself, by this quote it says that rushing into banks to make sure they didn't loose money completely had an affect on it over all. This sentence from the article states "Other programs put many Americans to work building roads, buildings, and parks." This is how or a piece of how America had to get pieced back together by president Roosevelt. Without his small actions that he did one mistake could have made it even worse. The New Deal helped everyone in this situation without it we would probably still be in The Great Depression or not even have America. All in all, these quotes give evidence that the past can effect the future and that if we do not remember the past we are condemned to repeat

When the Troubled Asset Relief Program was first put into place, $700 billion dollars was authorized to be used for this program. This meant that the possible cost of this policy could possibly end up being $700 billion. That money would go towards purchasing assets of companies that were unstable. After the program was put into place, the beneficiaries were major companies such as Goldman Sachs, JPMorgan Chase, Morgan Stanley, Merrill Lynch, AIG, Citigroup, Bank of America, GM, and Chrysler. As part of the Troubled Asset Relief Program, the Capital Purchase Program bought shares of 707 banks including some of the banks listed above. According to the Congressional Budget Office, the purchase of these shares ended up totalling $205 billion. Bank of America and Citigroup received a total of $40 billion of extra help on top of the help they got from the Capital Purchase

The program creates capital for healthy banks so a bank can sustain liquidity in credit markets. This is fundamentally to stabilize the credit crunch. The Reserves created many programs under Tarp to help alleviate the U.S. financial system, revive economic development, and avoid foreclosures. This was just one element to confront the subprime mortgage crisis. TowneBank was a “healthy” bank, so the Federal Reserve presented $76 million as part of the Troubled Asset Relief Program. Agreeing to take apart of TARP would make some of TowneBank’s investors believe there was trouble in management, and some believed that accepting TARP funds would lead to government interruption to their bank. TowneBank accepting the Tarp fund was a good decision as it provides a financial cushion if the economy and financial services industry collapsed. This was something many bankers feared because during the time they had never seen a crisis of this degree. The board of directors could also put the $76 million to good

Before 24 hours of the planned referendum on the bailout plan to break out from the specter of bankruptcy looming, Greeks appear feeling uncomfortable and fed-up with all this frightening and pressure by the troika against their country.