Crisis, Crash, and Response (YALE COURSES) Flashcards
What was the TARP bailout?
The Troubled Asset Relief Program passed under the Bush administration in 2008 was an effort by the federal government to bail out banks and other businesses by purchasing assets and equities. This aimed at stabilizing the market, relieving consumer debt, and bolstering the auto industry.
What was one factor that led to the Financial Crisis of 2008?
The efforts to create lax credit poilcies for low-income citizens which played an extensive role in setting up a subprime mortgage disaster.
Who first proposed TARP?
Treasury Secretary Henry Paulson.
How much was the TARP going to invest initially; what reduced the budget?
Originally TARP was going to demand that 700 billion be invested into bailing out the banks, but the Dodd-Frank Act stopped this from happening, reducing the budget to 475 billion.
What was the Capital Repurchase Program?
In October of 2008, the federal government announced it would be investing 250 billion of TARP into the Capital Repurchase Program which saw the purchasing of stocks in major banks, including
Bank of America/Merril Lynch
Bank of New York Mellon
Citigroup
Goldman Sachs
P. Morgan
Wells Fargo
Morgan Stanely
State Street
These institutions were permitted to sell equity interests to the government in amounts equal to 1-3% of the businesses risk-weighted assets.
How was TARP divided?
TARP was divided into 5 major areas
250 billion was dedicated to programs that stabilized banks
82 billion was set aside to bolster the auto industry
70 billion was used to support the American International Group
46 billion was committed to help Americans Avoid Foreclosure
27 billion was dedicated to programs to restart credit markets
What was controversial about TARP?
Bonuses given to top executives and employees with TARP funds when the companies were in dire need of bailout funds. This used taxpayer money to bail out the banks which started the crisis in the first place. In march 2008, the House passed a bill requiring a 90% tax on bonuses earned during 2008 for banks that recieved 5 billion or more of TARP funds.
Who was Alan Greenspan?
Considered a genius economist, he was important in illustrating the intellectual shock that pervaded the onset of the depression when he testified before the House Oversight that he had not expected or even understood how this could happen.
When was the apex of the crisis?
September of 2008
What was an encapsulating line that Obama said which illustated his approach to the crisis?
“We shouldnt be worrying about how we got here, we should be worrying about how to fix the problem.”
Who did Obama think could fix the crisis?
The people that were in the midst of the crisis in the first place. This led him to partner up with many individuals which were implicated in the deregulation that preceded the 2008 financial crisis.
Who was Timothy Geitner?
Timmothy Geitner was appointed Treasury Secretary by Obama and was often attacked under congressional hearings as being allied with wall street. in fact he was not, he was actually always a bureaucrat.
Who did Timothy Geitner work most closely with in his solutions to the 2008 financial crisis?
He worked very closely with wallstreet.
Who did Timothy Geitner work most closely with in his solutions to the 2008 financial crisis?
He worked very closely with wallstreet. This reflects how the Obama administration did not want to think about the perpetrators but just wanted to find solutions.
What political party voted the most for the TARP bill?
The Democrats.
