Emergency Economic Stabilization Act
The Emergency Economic Stabilization
Act of 2008, commonly referred to as a bail-
out of the U.S. financial system, is a law
enacted in response to the global financial
crisis of 2008 authorizing the United States
Secretary of the Treasury to spend up to
US$700 billion to purchase distressed assets,
especially mortgage-backed securities, and
make capital injections into banks. Both
foreign and domestic banks are included in
the bailout. The Federal Reserve also exten-
ded help to American Express, whose bank-
holding application it recently approved.
The Act was proposed by Treasury Secretary
Henry Paulson during the global financial
crisis of 2008.
The original proposal was three pages, as
submitted to the United States House of Rep-
resentatives. The purpose of the plan was to
purchase bad assets, reduce uncertainty re-
garding the worth of the remaining assets,
and restore confidence in the credit markets.
The text of the proposed law was expanded
to 110 pages and was put forward as an
amendment to H.R. 3997. The amendment
was rejected via a vote of the House of Rep-
resentatives on September 29, 2008, by a
margin of 228-205.
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 by a vote of 74-25.
Additional unrelated provisions added an es-
timated $150 billion to the cost of the pack-
age and increased the size of the bill to 451
pages. See Public Law 110-343 for de-
tails on the added provisions. 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 Bush signed the bill
into law within hours of its enactment, creat-
ing a $700 billion Troubled Assets Relief Pro-
gram to purchase failing bank assets.