Word of the Day: TARP Fund

Troubled Assets Relief Program

The Troubled Asset Relief Program (TARP) is a program of the United States government to purchase assets and equity from financial institutions in order to strengthen its financial sector. TARP is the largest component of the government’s measures in 2008 to address the subprime mortgage crisis.

TARP allows the United States Department of the Treasury to purchase or insure up to $700 billion of “troubled” assets. “Troubled assets” are defined as

(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and

(B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.”

TARP on Wikipedia …