The Emergency Economic Stabilization Act of 2008 (Division A of Pub.L. 110-343, 122 Stat. 3765, enacted October 3, 2008), commonly referred to as a bailout of the U.S. financial system, is a law enacted in response to the subprime mortgage crisis authorizing the United States Secretary of the Treasury to spend up to US$700 billion to purchase distressed assets, especially mortgage-backed securities, and give cash directly to banks (however, the plan to purchase distressed assets has been abandoned). Both foreign and domestic banks are included in the program. The Federal Reserve also extended help to American Express, whose bank-holding application it recently approved. The Act was proposed by Treasury SecretaryHenry Paulson during the global financial crisis of 2008.
The original proposal was submitted to the United States House of Representatives, with the purpose of purchasing bad assets, reducing uncertainty regarding the worth of the remaining assets, and restoring confidence in the credit markets. The bill was then expanded and put forth as an amendment to H.R. 3997.
Hundreds of thousands of American taxpayers called and emailed their congressional representatives. The overwhelming message was: DO NOT use our tax dollars to bail out private banks!
The Congress heard the People:
The amendment was rejected via a vote of the House of Representatives on September 29, 2008, voting 205–228.
30 September 2008 was the Jewish holiday of Rosh HaShanah. The U.S. Congress and Senate were in recess during the Jewish holiday.
Here is a description of Rosh HaShanah and its relationship to Yom Kippur, the day when Kol Nidre is recited:
Rosh Hashanah and Yom Kippur are considered High Holy Days in the Jewish religion. Rosh Hashanah is commonly known as the Jewish New Year and Yom Kippur is also known as the Day of Atonement. These two days and the days in between are known as the Days of Awe or the Days of Repentance.
Rosh Hashanah is a time to start thinking about the mistakes of the past year and resolutions for the next year. One fun thing to do on this day is to eat apples and honey for a sweet new year. Another popular thing to do is called Tashlikh. People walk to a place where there is flowing water and empty their pockets into the water. This action symbolizes casting away a person’s sins.
During the time of Rosh Hashanah and Yom Kippur a common practice is to seek out people that one has wronged during the past year. A person asks for forgiveness and, if possible, rights the wrong. Reconciliations with other people must take place before Yom Kippur.
Yom Kippur is considered the most important day in the Jewish year. It is on this day that God’s judgments in the Book of Life are sealed. This day is one of fasting, repentance, and prayer. Yom Kippur ends at nightfall with the sounding of the shofar. http://www.bry-backmanor.org/holidayfun/highholydays.html
The Senate and House of Representatives re-convened the next day.
On October 1, 2008, the Senate debated and voted on an amendment to H.R. 1424, which substituted a newly revised version of the Emergency Economic Stabilization Act of 2008 for the language of H.R. 1424. The Senate accepted the amendment and passed the entire amended bill, voting 74–25. Additional unrelated provisions added an estimated $150 billion to the cost of the package and increased the length of the bill to 451 pages. (See Public Law 110-343 for details on the added provisions.)
U.S. Representative Barney Frank made numerous public appearances urging passage of the amended Bill. He argued that it was essential to save the U.S. financial system from complete collapse.
The amended version of H.R. 1424 was sent to the House for consideration, and on October 3, the House voted 263-171 to enact the bill into law. President George W. Bush signed the bill into law within hours of its congressional enactment, creating the $700 billion Troubled Asset Relief Program (TARP) to purchase failing bank assets. TARP was dwarfed by other guarantees and lending limits: analysis by Bloomberg found the Federal Reserve had, by March 2009, committed $7.77 trillion to rescuing the financial system, more than half the value of everything produced in the U.S. that year. Viral Acharya, a New York University economics professor who has worked as an academic adviser to the New York Fed, observed: “Banks don’t give lines of credit to corporations for free. Why should all these government guarantees and liquidity facilities be for free?” Travis Waldron of Think Progress noted that, unlike the TARP funds, “the loans came with virtually no strings attached for the banks”.