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Troubled Asset Relief Program Essay

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Bradley White Professor Bick Fin. Institutions Troubled Asset Relief Program More commonly known as TARP, the Troubled Asset Relief Program was created in 2008 due to the collapse of financial institutions and near collapse of several investment banks. Lehman Brothers and AIG were two of the financial institutions that completely shut down and collapsed while Goldman Sachs and Merrill Lynch were very close to complete downfall. These major problems caused Henry Paulson, the Treasury Secretary, to step in and input TARP into the financial market. TARP is a pure government action that put $700 billion back into the market in order to strengthen and rebuild financial institutions (Wall Street Oasis). At first, TARP was mainly designed for the …show more content…

This caused many problems because in an unstable market, the pricing of assets is difficult to do much less be accurate. Second, once the government had bought the assets, it was difficult to manage them. This is why TARP changed allowing the government to buy stakes, so that assets could be more easily managed. Overall, the majority of financial companies, institutions, and banks, all received a form of help in terms of money from the Troubled Asset Relief Program (Wall Street Oasis). A major question surrounding TARP is behind the argument to create such a powerful relief program. TARP essentially stopped complete financial disaster within the United States market by putting money back into the financial market. Many people did not like the idea of TARP, but agreed that it was absolutely necessary in order to save the financial market. An example of this is when Mitt Romney said, “The TARP program, while not transparent and not having been used as wisely it should have been, was nevertheless necessary to keep banks from collapsing in a cascade of failures. You cannot have a free economy and free market if there is not a financial system…” (Law Street Media). People understood the significance of

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