What 2008 U.S. law authorized the Troubled Asset Relief Program during the financial crisis?

The Emergency Economic Stabilization Act authorized the Troubled Asset Relief Program during the 2008 U.S. financial crisis.

President George W. Bush signed the act on October 3, 2008. Congress passed it after an earlier version was rejected by the House of Representatives, amid intense concern about collapsing credit markets and failures among major financial institutions.

The law created TARP and authorized the U.S. Treasury to spend up to $700 billion purchasing troubled assets and investing in financial institutions. The program’s purpose was to stabilize the banking system and restore lending, rather than directly stimulate household consumption.

TARP later supported automobile companies and other financial interventions, and the government recovered much of the money invested. The act is often confused with the Dodd–Frank Act, which became law in 2010 and introduced broader financial-regulation reforms after the crisis.