By Caleb Silver in Investopedia
The federal bailout of financial institutions in the midst of the 2008-09 financial crisis was one of the most critical and controversial government led interventions in history. Unprecedented policy moves were enacted that granted the government the ability to pump hundreds of billions of dollars into the banking system by purchasing troubled companies’ assets and equity, take preferred equity stakes in financial institutions, buy up failing mortgages and bail out U.S. automakers.
The Troubled Asset Relief Program, TARP, as it is known, was enacted by President George Bush on October 3, 2008, with the signing of the Emergency Stabilization Act. While controversial, many credit TARP as a key component in stabilizing the crisis and preventing more bank failures and foreclosures. Neel Kashkari, who has served in the U.S. Treasury since 2006, was confirmed as Assistant Secretary of the Treasury in 2008, and put in charge of overseeing TARP.
Today, Kashkari is President of the Minneapolis Federal Reserve Bank where he continues to reiterate that banks are still ‘too big to fail’, and should be subject to higher capital requirements.