What is the relief program from problem assets?
The program for assistance in problem assets, commonly pronounced and shortened as a tarp, was the first major US government to stabilize the US economy as a result of economic collapse in 2007-2008. The collapse evoked what was called a great recession and the worst economic decline in the US from great depression. Program, signed in the law of President George W. Bush on 3 October 2008, under H.R. 1424, entitled the government to spend billions of dollars on the purchase of defective mortgages supported securities. By purchasing these so -called "problem assets", the government hoped to provide financial stability and insert a market with a more fluid stream of loan. When referring to the financial assistance of this period, people are largely referred to as a problem assets program.
in 2008 financial powerhouses that caused Home Mortgage insurance - especially the Federal Association for National Mortgage or Fannia Mae; Federalthe company Home Mortgage or Freddie Mac; and American Insurance Group (AIG) - Began to start and collapse under the weight of defective mortgage loans on subprime. Subprime mortgages are more risky because they are given to debtors with the least probability that they will be able to pay back the loan. In other words, borrowers with bad credit scores were approved for loans by banks who were insured against these loans by organizations such as Fannie Mae and Freddie Mac. The problem was impaired because these mortgage loans were then packed in securities that investors could buy and sell.
When millions of house owners could not make payments and fail on their loans, it caused a chain reaction of financial failure; Banks that caused the loans to hit securities supported by mortgages and financial powerhouse binding these mortgages-wicked in securities-as well as the wound of such catastrophic proportions that the federal government had to entert to prevent the collapse of the era of depression. The government did this by purchasing defective loans and mortgages secured by securities, with hundreds of billions of dollars provided through a program for help with problem assets. The estimated cost of the account was initially $ 700 billion in the US (USD), but over time the Congress Budget Office (CBO) estimated the long -term costs of less than half of it. If the government did not enter, banks would be forced to drastically increase the cost of mortgage installments, and most economists believe that the housing market would collapse much more than it was ultimately.
The US government has led the US government to literally acquire certain organizations, although the government expressed its intention to sell companies back to private shareholders. Failed businesses, such as the anap, the government was purchased by Merican General Motors (GM). Businesses that have received money from the Troubled Asset Relief Program were required by law to pay for PEBack, which began to do already in 2009. The program and some organizations that received money came under a heavy fire when they were found that companies like AIG use some of the money to pay rich bonuses for some of the very heads.
The program for assistance in problem assets should not be confused with the Restoration Act, which was signed in law by President Barack Obama on February 17, 2009. The law assigned another $ 787 billion to invest in recovery of the US economy. Most of this money was used as a short -term stimulus, some of which were provided in the form of personal inspections for every American citizen and other parts of its parts have spread to state governments and other financial structures, of which liquid cash were beneficial.