The 2008 U.S. government program to purchase troubled assets from banks was the Troubled Asset Relief Program, or TARP.
Congress created TARP through the Emergency Economic Stabilization Act, signed on October 3, 2008, as the global financial crisis intensified. The Treasury was initially authorized to use up to $700 billion to buy or insure troubled mortgage-related assets and other instruments threatening financial stability.
The program’s original design focused on removing illiquid “toxic” assets from financial institutions. In practice, much of the early money instead recapitalized banks through purchases of preferred stock and warrants. Major recipients included Citigroup, Bank of America, AIG, JPMorgan Chase, and Wells Fargo.
TARP is often confused with quantitative easing, or QE, which involves central-bank purchases of securities to influence monetary conditions. The FDIC insures deposits, while Sarbanes-Oxley is a corporate-accounting and governance law. TARP was a Treasury-administered financial rescue program, not a banking regulator or disclosure statute.