"The Troubled Asset Relief Program (TARP) was created by the Emergency Economic Stabilization Act (EESA) enacted on October 3, 2008. EESA was passed by Congress and signed by President Bush to address an ongoing financial crisis that reached near-panic proportions in September 2008. Financial turmoil began in August 2007 when asset-backed securities, particularly those backed by subprime mortgages, suddenly became illiquid and fell sharply in value as an unprecedented housing boom turned to a housing bust. The Federal Reserve (Fed) stepped in with emergency measures to restore liquidity, temporarily calming markets. Losses in mortgage markets, however, continued and spilled into other markets. Financial firms eventually wrote down many of these losses, depleting their capital. Uncertainty about future losses on illiquid and complex assets led to some firms having reduced access to private liquidity, with the loss in liquidity being catastrophic in some cases. […] This report provides a brief outline of the programs created under TARP, changes made by Congress, and a summary of the current status and estimated costs of the program. It also provides an Appendix that contains detailed discussions of the individual TARP programs. This report will be updated as warranted by market and legislative events."
CRS Report for Congress, R41427