The Occupy Wall Street movement was born as a reaction to the government’s response to the Great Recession of 2008 and the Troubled Assets Relief Program (TARP). The primary purpose of TARP was to
Group of answer choices
a. reduce the national debt.
b. reduce the annual budget deficit.
c. assist endangered financial institutions.
d. bail out the auto industry.
e. respond to rising unemployment.
The correct answer and explanation is:
The correct answer is c. assist endangered financial institutions.
The Troubled Asset Relief Program (TARP) was a key part of the U.S. government’s response to the 2008 financial crisis. TARP was signed into law in October 2008 and authorized the U.S. Department of the Treasury to purchase or insure up to \$700 billion of “troubled assets.” The main goal of TARP was to stabilize the financial system by providing relief to institutions facing significant distress, including major banks, insurance companies, and other financial entities. This was done in the hope that by supporting these institutions, the broader economy could avoid a complete collapse and eventually recover.
During the Great Recession, a number of financial institutions faced insolvency because they had significant exposure to bad loans, especially subprime mortgages. Many banks were unwilling to lend money to each other because of the fear that other banks might be insolvent, which led to a freezing of credit markets. The lack of available credit further deepened the economic downturn. TARP was designed to address this by injecting capital into banks and other financial institutions, thereby restoring confidence in the financial system.
While TARP did provide some assistance to the auto industry through the bailout of General Motors and Chrysler, its primary purpose was to stabilize the financial system. The program was controversial, with many arguing that it unfairly benefited large corporations and bankers who had contributed to the crisis. The Occupy Wall Street movement emerged as a reaction to these perceived injustices, advocating for economic fairness, regulation of financial institutions, and greater accountability in government decision-making.