Podcast Paper: Troubled Asset Relief Program
Name:
Institution:
The Global Financial Crisis and Troubled Asset Relief Program
In 2008 the global economy experienced its worst economic turmoil in 2008 since the Great Depression of the 1930s. The effects of the crisis started to show in mid 2007 and by September 2008, the situation was out of hand. The world stock market had plummeted, huge financial institutions had collapsed and the government in the developed economies had put in place measures to rescue their economies from disintegrating. The first clear indicator of the crisis was in 2007 when the high prices of homes in the United States nose-dived and there were massive defaults on mortgages. The US financial sector soon started trembling and before long the world’s financial markets were in tatters. The US financial sector was the main casualty and the effects were felt by many businesses and people that rely on credit. The auto industry was on its knees with a number of players in the industry filing for bankruptcy; indeed, they only stayed afloat through government bailouts. Indeed, every sector of the global economy felt the stinging impact of the crisis with the US bearing the blunt effects.
Even though massive fiscal and monetary policies prevented the US economy from collapsing, recovery has been very slow. The government policies were not applauded by many Americans who believed that the government was bailing out the same institutions responsible for the crisis. Among the government programs initiated during the recession was the Troubled Asset Relief Program. It was created by the Emergency Economic Stabilization Act to address the biting financial crisis that was at its peak in September 2008. The trea...
... middle of paper ...
... captured by the interests of Wall Street that usually do not serve the welfare of the American people. In fact he pointed out that no single presidential candidate had the willpower to streamline the operations of the financial systems. However, he states that since there are Members of Congress, who severed relations for the sake of the economy and its people, the same people can be the driving force towards meaningful reforms. The American people should never be subjected to such humiliation by a few large financial institutions that have the material resources to influence the decision makers in the economy. In fact, if political will as well as proper legislation and regulation existed, the American people would have reaped optimum returns from the bailout program. Equity stake at the collapsing huge banks would have given the taxpayer greater returns.
Just as the great depression, a booming economy had been experienced before the global financial crisis. The economy was growing at a faster rtae bwteen 2001 and 2007 than in any other period in the last 30 years (wade 2008 p23). An vast amount of subprime mortgages were the backbone to the financial collapse, among several other underlying issues. As with the great depression, there would be a number of factors that caused such a devastating economic
The financial crisis of 2007–2008 is considered by many economists the worst financial crisis since the Great Depression of the 1930s. This crisis resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. The crisis led to a series of events including: the 2008–2012 global recessions and the European sovereign-debt crisis. The reasons of this financial crisis are argued by economists. The performance of the Federal Reserve becomes a focal point in this argument.
This reminds of the real reason Andrew Jackson was so passionate about vetoing the bank, which wasn’t that, “the rich and powerful too often bend the acts of government to their selfish purposes,” (Doc B). During this time of Jackson’s presidency, the election was soon to come, and his opponent Henry Clay wanted to renew the bank charter well before it was due, in order to better his position to run. Andrew Jackson took this as an offense, and started a personal war with the bank’s president, Nicholas Biddle. In reality, it was Jackson with the “selfish purposes” to veto the bank in the first
Amity Shlaes tells the story of the Great Depression and the New Deal through the eyes of some of the more influential figures of the period—Roosevelt’s men like Rexford Tugwell, David Lilienthal, Felix Frankfurter, Harold Ickes, and Henry Morgenthau; businessmen and bankers like Wendell Willkie, Samuel Insull, Andrew Mellon, and the Schechter family. What arises from these stories is a New Deal that was hostile to business, very experimental in its policies, and failed in reviving the economy making the depression last longer than it should. The reason for some of the New Deal policies was due to the President’s need to punish businessmen for their alleged role in bringing the stock market crash of October 1929 and therefore, the Great Depression.
After he was elected as the president of the United States, the corruption with financial business got his full attention that he had to warn the nation that “Special Privilege,” which is the Second Bank of the United States, has corrupted it.[2] In this
In the midst of the current economic downturn, dubbed the “Great Recession”, it is natural to look for one, singular entity or person to blame. Managers of large banks, professional investors and federal regulators have all been named as potential creators of the recession, with varying degrees of guilt. No matter who is to blame, the fallout from the mistakes that were made that led to the current crisis is clear. According to the Bureau of Labor Statistics, the current unemployment rate is 9.7%, with 9.3 million Americans out of work (Bureau of Labor Statistics). Compared to a normal economic rate of two or three percent, it is clear that the decisions of one group of people have had a profound affect on the lives of millions of Americans. The real blame for this crisis rests on the heads of the managers that attempted to play the financial system through securitization, and forced the American government to “bail out” their companies with taxpayer money. These managers, specifically the managers of AIG and Citigroup, should be subject to extreme pay caps for the length of time that the American taxpayer holds majority holdings in their companies, as a punitive punishment for causing the Great Recession.
The Dodd-Frank Wall Street Reform and Consumer Protection Act’s policies haven’t really been implemented to the extent that regulators would have liked. Although the legislation takes many steps in addressing systematic risks in the United States financial system and improving coordination among regulators, some critics believe that alternative options might have been more effective. The coming years will give us a better understanding of how well the Dodd-Frank Act addressed these concerns.
Just as John Stuart Mill did in the Principles of Political Economy, Paul Krugman in The Return of Depression Economics and the Crisis of 2008 felt that the government should not only help American businesses gain profits, but also play a major role in protecting the people against big businesses and moguls. Krugman believes that the average citizen cann...
In 2008, the U.S economy went through the “Great Recession,” possibly as a result of inappropriate and ineffective regulation in the banking system, causing Lehman Brothers to file for bankruptcy. There was a large debt and housing bubble which resulted in plummeting real estate prices and financial securities. Peter D. Schiff’s “How an Economy Grows and Why it Crashes” uses comic illustrations and a simple storyline to teach readers about how the 2008 recession came about and how the U.S tried to relieve it using the ideas of credit, savings, and other economic concepts.
What at first seemed to be an economic slump turned into a brutal crisis, and all eyes looked to the Government and Federal Reserve to help the economy. With the large amount of debt the economy faced the Federal Reserve stepped in and bailed out the banks in an attempt to smooth over the financial struggles of the economy. The banks that survived took precautionary measures, making it difficult for businesses and consumers to borrow (Love, 2011). Thus leading to businesses failing and less jobs being created. The large amount of debt had also taken its toll on the job market. Between 2007 and 2009 employment dropped by 8 million workers, causing the unemployment rate to go from 4.7 percent to 10 percent (McConnell, 2012).
The Great Depression was one of the greatest challenges that the United States faced during the twentieth century. It sidelined not only the economy of America, but also that of the entire world. The Depression was unlike anything that had been seen before. It was more prolonged and influential than any economic downturn in the history of the United States. The Depression struck fear in the government and the American people because it was so different. Calvin Coolidge even said, "In other periods of depression, it has always been possible to see some things which were solid and upon which you could base hope, but as I look about, I now see nothing to give ground to hope—nothing of man." People were scared and did not know what to do to address the looming economic crash. As a result of the Depression’s seriousness and severity, it took unconventional methods to fix the economy and get it going again. Franklin D. Roosevelt and his administration had to think outside the box to fix the economy. The administration changed the role of the government in the lives of the people, the economy, and the world. As a result of the abnormal nature of the Depression, the FDR administration had to experiment with different programs and approaches to the issue, as stated by William Lloyd Garrison when he describes the new deal as both assisting and slowing the recovery. Some of the programs, such as the FDIC and works programs, were successful; however, others like the NIRA did little to address the economic issue. Additionally, the FDR administration also created a role for the federal government in the everyday lives of the American people by providing jobs through the works program and establishing the precedent of Social Security...
...avoiding even deeper collapse of the global GDP and of employment. The government also created the Troubled Asset Relief Program (TARP), for the establishment and administration of the treasury fund, in an effort to control the ongoing crisis.
The "subprime crises" was one of the most significant financial events since the Great Depression and definitely left a mark upon the country as we remain upon a steady path towards recovering fully. The financial crisis of 2008, became a defining moment within the infrastructure of the US financial system and its need for restructuring. One of the main moments that alerted the global economy of our declining state was the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and after this the economy began spreading as companies and individuals were struggling to find a way around this crisis. (Murphy, 2008) The US banking sector was first hit with a crisis amongst liquidity and declining world stock markets as well. The subprime mortgage crisis was characterized by a decrease within the housing market due to excessive individuals and corporate debt along with risky lending and borrowing practices. Over time, the market apparently began displaying more weaknesses as the global financial system was being affected. With this being said, this brings into question about who is actually to assume blame for this financial fiasco. It is extremely hard to just assign blame to one individual party as there were many different factors at work here. This paper will analyze how the stakeholders created a financial disaster and did nothing to prevent it as the credit rating agencies created an amount of turmoil due to their unethical decisions and costly mistakes.
The recent Global Financial Crisis (GFC) initially began with the collapse of credits and financial markets, which caused by the sub-prime mortgage crisis in the US in 2007. The sub-prime mortgages were given to high-risk lenders (with bad credit history) who were in danger of defaulting, which eventually caused a global credit crunch, where the banks were unwilling to lend to each other. In October 2008, the collapse of the major financial institutions and the crash of stock markets marked the peak of this global economic slowdown (Euromonitor International, 2008).
Warwick J. McKibbin, and Andrew Stoeckel. “The Global Financial Crisis: Causes and Consequences.” Lowy Institute for International Policy 2.09 (2009): 1. PDF file.