Changes

The Treasury TARP program proved erratic and had to be radically modified several times. The Treasury dropped the original plan to buy toxic securities and instead has used $250 billion to prop up major banks. In October Paulson and Bernanke used their new powers to take an ownership stake in the nine largest U.S. banks, of $7 to $25 billion each. These banks are now partly owned and controlled by the government. However those banks are keeping the money and not lending it out. The price of bank stocks has fallen sharply since the bailout passed. The world's largest bank, Citigroup, was on the verge of collapse in late November and received a second bailout of $20 billion (in addition to $25 billion in October), and a federal guarantee to cover most of its toxic investments.

The Treasury TARP program proved erratic and had to be radically modified several times. The Treasury dropped the original plan to buy toxic securities and instead has used $250 billion to prop up major banks. In October Paulson and Bernanke used their new powers to take an ownership stake in the nine largest U.S. banks, of $7 to $25 billion each. These banks are now partly owned and controlled by the government. However those banks are keeping the money and not lending it out. The price of bank stocks has fallen sharply since the bailout passed. The world's largest bank, Citigroup, was on the verge of collapse in late November and received a second bailout of $20 billion (in addition to $25 billion in October), and a federal guarantee to cover most of its toxic investments.

The Bush administration initially refused to allow TARP money to be used to help the [[automobile]] industry<ref>http://online.wsj.com/article/SB122670818143330019.html Wall Street Journal, "GM Blitzes Washington in Attempt to Win Aid", November 15, 2008</ref>, but then on December 19, 2008, one month before leaving office, President Bush announced that 17.4 billion or TARP funds would be given to the automobile industry in the form of bridge loans<ref name=bushremarksautobailout>http://blogs.wsj.com/autoshow/2008/12/19/bushs-remarks-on-the-auto-rescue-plan/ Wall Street Journal, "Bush’s Remarks on the Auto Rescue Plan", December 19, 2008</ref>, just enough to prevent the companies from going bankrupt for a few weeks<ref>http://online.wsj.com/article/SB122969367595121563.html Wall Street Journal, "U.S. Throws Lifeline to Detroit", December 20, 2008</ref>. Bush defended the move by saying "if we were to allow the [[free market]] to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers."<ref name=bushremarksautobailout />

In mid-December Bush announced that $17.4 billion of TARP funds would be given to the automobile industry in the form of bridge loans<ref name=bushremarksautobailout>http://blogs.wsj.com/autoshow/2008/12/19/bushs-remarks-on-the-auto-rescue-plan/ Wall Street Journal, "Bush’s Remarks on the Auto Rescue Plan", December 19, 2008</ref>, just enough to prevent the companies from going bankrupt for a few weeks<ref>http://online.wsj.com/article/SB122969367595121563.html Wall Street Journal, "U.S. Throws Lifeline to Detroit", December 20, 2008</ref>. Bush defended the move by saying "if we were to allow the [[free market]] to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers."<ref name=bushremarksautobailout />

By mid-November the market had lost confidence in Treasury Secretary Paulson, who indicated he was baffled and would let the incoming Obama administration handle the unspent $450 billion.  The stock market jumped 6% on the news that Obama had picked New York banker Timothy Geithner to replace Paulson.<ref>Theo Francis, "Obama to Nominate New York Fed Chief Timothy Geithner as Treasury Secretary," [http://www.businessweek.com/election/2008/blog/archives/2008/11/obama_to_nomina.html?chan=top+news_top+news+index+-+temp_top+story ''Business Week'' Nov. 21, 2008]</ref>  In late November the Federal Reserve announced it will buy up to $600 billion in mortgage-related assets from Fannie Mae and Freddie Mac, hoping to restart the housing and credit markets.  Under the new "Term Asset-Backed Securities Loan Facility", or '''TALF''', the Federal Reserve will loan up to $200 billion to financial companies that hold securities backed by consumer and small-business loans.  

By mid-November the market had lost confidence in Treasury Secretary Paulson, who indicated he was baffled and would let the incoming Obama administration handle the unspent $450 billion.  The stock market jumped 6% on the news that Obama had picked New York banker [[Timothy Geithner]] to replace Paulson.<ref>Theo Francis, "Obama to Nominate New York Fed Chief Timothy Geithner as Treasury Secretary," [http://www.businessweek.com/election/2008/blog/archives/2008/11/obama_to_nomina.html?chan=top+news_top+news+index+-+temp_top+story ''Business Week'' Nov. 21, 2008]</ref>  In late November the Federal Reserve announced it will buy up to $600 billion in mortgage-related assets from Fannie Mae and Freddie Mac, hoping to restart the housing and credit markets.  Under the new "Term Asset-Backed Securities Loan Facility", or '''TALF''', the Federal Reserve will loan up to $200 billion to financial companies that hold securities backed by consumer and small-business loans.  

Hedge funds are private investment companies with $1.7 trillion in assets. They have lost $180 billion since July and some are near collapse. Investors are demanding their money back, and Wall Street in late October is bracing for a shake-out in the industry.<ref> Louise Story, "Citadel Chief denies rumors of trouble"  [http://www.nytimes.com/2008/10/25/business/25hedge.html?ref=business ''New York Times,'' Oct 24, 2008]</ref>

Hedge funds are private investment companies with $1.7 trillion in assets. They have lost $180 billion since July and some are near collapse. Investors are demanding their money back, and Wall Street in late October is bracing for a shake-out in the industry.<ref> Louise Story, "Citadel Chief denies rumors of trouble"  [http://www.nytimes.com/2008/10/25/business/25hedge.html?ref=business ''New York Times,'' Oct 24, 2008]</ref>