Quick Definition

The Troubled Asset Relief Program (TARP) was a U.S. government program established in 2008 to stabilize the financial system by purchasing toxic assets and equity from financial institutions.

Examples

• 1In 2008, TARP provided $245 billion to banks, which helped prevent the collapse of major financial institutions like Bank of America and Citigroup.
• 2TARP also included a component called the Automotive Industry Financing Program, which provided funds to General Motors and Chrysler, helping them avoid bankruptcy.
• 3The Capital Purchase Program under TARP allowed the U.S. Treasury to purchase preferred stock in smaller regional banks, bolstering their capital and enabling them to continue lending during the financial crisis.

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