TARP signed
Congress passed the Emergency Economic Stabilization Act after rejecting an earlier version two weeks before. The Treasury received $700B in authority to buy troubled assets. It ended up using most of it to directly recapitalize the largest banks. The Fed's balance sheet expanded from $900B to $2.2T inside three months.
Every major 2008 bailout recipient had returned to profitability by 2010. The TARP program, measured strictly on repayments, showed a small profit for taxpayers. Measured on political legitimacy, it produced the Tea Party, Occupy Wall Street, and a decade of populism. The accounting and the politics told different stories.
08 · Global Financial Crisis
The US subprime mortgage market cracked in 2007. It took the investment banking industry with it in 2008. Lehman Brothers filed bankruptcy on September 15; the following two weeks, the global financial system came within hours of seizing. AIG, Fannie Mae, Freddie Mac, Wachovia, and Washington Mutual were rescued in succession. $33T in global wealth was destroyed. Recovery took until 2013.
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