Emergency Economic Stabilization Act of 2008
The crisis in the financial markets, the housing slump and the credit crunch are straining our fragile
economy. Consumer and business spending is down and everyone is looking for ways to make their money
go further. On October 3, the President signed into law an $850 billion financial markets rescue package, the
Emergency Economic Stabilization Act of 2008 with more than $150 billion in tax incentives.
Time for planning. The Emergency Economic Stabilization Act of 2008 is one of the largest tax laws in
recent years. You may be able to take advantage of one or more tax incentives. There is still time in 2008 to
utilize these incentives in your strategic tax planning. Planning to take maximum advantage of these
incentives in 2009 also should start now.
Troubled Assets Relief Program. Congress gave the Treasury Department sweeping powers to purchase
"troubled assets" from banks and other institutions. Many of these troubled assets are linked to home
mortgages. However, the housing slump has sent millions of homeowners into foreclosure, making these
assets much less valuable. If a bank or other institution seeks to participate in the rescue program, it must
agree to new curbs on executive compensation. In some situations, the Treasury Department can set limits
on the compensation of an entity's executives. On other cases, the Treasury Department can limit how much
the company deducts for executive compensation. Congress also authorized the Treasury Department to
prohibit or limit golden parachute payments.
Tax cuts. Originally, the rescue package did not include the "extenders," energy incentives and disaster
relief. Only after the House defeated the original rescue package on September 30 did the Senate add these
"sweeteners" to win more support for the rescue plan. The Senate's strategy worked. On October 3, the
House passed the Senate's version of the rescue plan including the tax incentives. President Bush signed the
bill into law later