Which U.S. federal program was created in 2008 to buy troubled financial assets during the market crash?

The Troubled Asset Relief Program was created in 2008 to buy troubled financial assets during the market crash.

Known as TARP, the program was authorized by the Emergency Economic Stabilization Act, signed on October 3, 2008. Congress initially approved up to $700 billion, though the Treasury ultimately used less than that authorization. The program was designed to stabilize the financial system by purchasing or insuring mortgage-related assets and investing in financial institutions.

In practice, the largest early intervention was the Capital Purchase Program, through which the Treasury bought preferred shares in banks. TARP also supported the rescue of major automakers and other financial institutions. Many investments were later repaid, although the program remained politically controversial.

TARP was not the same as the Federal Reserve’s separate lending facilities or the 2008 bank rescue as a whole. It was one federal response among several, created during the broader global financial crisis.