Lehman Brothers' failure in 2008 was followed by the creation of the $700 billion Troubled Asset Relief Program, or TARP.
After Lehman Brothers filed for bankruptcy on September 15, 2008, financial panic intensified. Congress passed the Emergency Economic Stabilization Act on October 3, 2008. The law authorized up to $700 billion for the Treasury to address troubled assets and stabilize the financial system.
TARP was initially presented mainly as a program to purchase mortgage-related assets, but the Treasury soon used much of it to inject capital directly into banks through the Capital Purchase Program. The program also supported the auto industry and helped facilitate assistance to American International Group.
The program's authorized ceiling was later reduced to $475 billion by the Dodd-Frank Act. TARP is frequently confused with the Federal Reserve's lending facilities, which were separate emergency responses during the crisis.