What was the Troubled Assets Relief Program (TARP) designed to do?

The Troubled Assets Relief Program (TARP) was designed primarily to purchase troubled assets from financial institutions. Implemented in response to the financial crisis of 2007-2008, TARP aimed to stabilize the banking system by providing capital injections and purchasing illiquid assets, particularly mortgage-backed securities, that were losing value due to the housing market collapse. By removing these distressed assets from banks' balance sheets, TARP sought to restore confidence in the financial system, facilitate lending, and ultimately help stimulate economic recovery.

This initiative was critical in addressing the liquidity crisis and providing a safety net for the financial institutions, which in turn was hoped to prevent broader economic collapse. The design and execution of TARP reflected a significant government intervention aimed at stabilizing the financial sector during a time of unprecedented economic turmoil.