tarp troubled assets relief program
DESCRIPTION
TARP Troubled Assets Relief Program. Yi Zhuang BA 543. Agenda. Subprime Mortgage Crisis About TARP The Positive Effects of TARP Controversy about TARP. Subprime Mortgage Crisis. Causes of the Crisis: Housing Prices Peak in 2006 Subprime Borrowers Housing Prices Drop Late 2006-2007 - PowerPoint PPT PresentationTRANSCRIPT
TARPTroubled Assets Relief
Program
Yi ZhuangBA 543
Agenda
• Subprime Mortgage Crisis• About TARP• The Positive Effects of
TARP• Controversy about TARP
Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-100
50
100
150
200
250 Case-Shiller Ten City Home Price Index
Subprime Mortgage Crisis
Causes of the Crisis:• Housing Prices Peak in 2006• Subprime Borrowers• Housing Prices Drop Late 2006-2007• High Mortgage Defaults and
Foreclosures
Case-Shiller Ten City Home Price Index
Companies Failed During Crisis
New Century Financial Corporation
American Freedom Mortgage
American Home Mortgage
Bernard L. Madoff Investment Securities LLC
Charter Communications
Lehman Brothers
Linens’n Things
Mervyns
NetBank
Terra Securities
Sentinel Management Goroup
Washington Mutual
Icesave
Kaupthing Singer & Friedlander
Yamato Life
Circuit City
Banco Privado Portugues
Allco Finance Group
Waterford Wedgwood
Saab Automobile
BearingPoint
Tweeter
Chrysler
General Motors
Main Events in 2008
The Federal Housing Finance Agency announced that it had placed Freddie Mac and Fannie Mae into conservatorship
Lehman Brothers announced it was filing for bankruptcy
Merrill Lynch agreed to be sold to Bank of America for approximately $50 billion
AIG sought a $40 billion bridge loan from the Federal Reserve Board to stay in business
The Dow Jones Industrial Average fell 500 points
About TARP 10.3.2008-10.3.2010
Fundamental Part of the Emergency Economic Stabilization Act of 2008
The purpose of TARP was to restore the liquidity and stability of the U.S. financial system which was near collapse at the end of 2008.
About TARP 10.3.2008-10.3.2010 (con’t)
Initial investment was up to $700 billion Actual expenditures: $431 billion Recovered 94% of the funds
(3.31.2013)
TARP & Citigroup
TARP's Five Program Areas
Bank Auto Industry
AIG Credit Market
Housing
245B 82B 70B 27B 46B
Dec. 2008: TARP funds spent on any program that deemed necessary to alleviate the financial crisis.
The Positive Effects of TARP
Economic Antifreeze Withdrawing Money from the Banks Revving up the Auto Industry Saved 8.5 M Jobs
Controversy of TARP
TARP Cost Taxpayers Hundreds of Billions of Dollars
TARP Was a Gift for Wall Street that Did Nothing for Main Street
TARP Was a Quick Fix for the Market Meltdown but Left our Financial System Weak
TARP Was the Centerpiece of a Strategy by President Obama to Assert More Government Control Over the Economy
Thank You & Qs?