Which 2008 U.S. government program injected capital into banks during the financial-market crash?

The Troubled Asset Relief Program injected capital into banks during the 2008 U.S. financial-market crash.

The Troubled Asset Relief Program, usually called TARP, was created by the Emergency Economic Stabilization Act, signed on 3 October 2008. Congress initially authorized up to $700 billion to purchase troubled assets and stabilize the financial system.

Although the program’s original description emphasized mortgage-related assets, its most visible early action was the Capital Purchase Program. The U.S. Treasury used it to buy preferred shares in banks, providing capital during a period when investors feared widespread insolvency and credit markets were frozen.

TARP is often described simply as a bank bailout, but its assistance reached other sectors as well, including automobile companies. Many participating institutions later repurchased the government’s shares, and the overall fiscal result was more complex than the headline authorization. TARP did not prevent the crash from beginning; it was a response to the crisis that intensified after Lehman Brothers failed.