What Is the Emergency Economic Stabilization Act (EESA) of 2008?

What Is the Emergency Economic Stabilization Act (EESA) of 2008?

To address the financial crisis, Congress passed the Emergency Economic Stabilization Act (EESA) in 2008. The EESA allowed the Treasury to buy up to $700 billion in troubled assets, later reduced to $475 billion. Proponents aimed to prevent a financial system collapse, while detractors called it a Wall Street and bank bailout.


In 2008, Congress passed the Emergency Economic Stabilization Act to address the subprime mortgage crisis. This law allowed the Treasury secretary to purchase up to $700 billion of troubled assets to restore liquidity in financial markets. The original proposer of the EESA was Henry Paulson.

EESA and TARP Overview

In the late 2000s, the severe financial crisis prompted the House of Representatives to reject an initial proposal for the EESA in September 2008. However, the bill was later revised and passed in the following month to address the economic repercussions of the mortgage meltdown.

The implementation of the EESA led to the creation of the Troubled Assets Relief Program (TARP), which aimed to stabilize the financial system. Under this program, the Treasury secretary was granted the authority to purchase troubled assets from financial institutions, with a substantial fund of $700 billion.

The primary goals of the TARP were to safeguard home values, college funds, retirement accounts, and life savings, preserve homeownership, boost job opportunities and economic growth, maximize returns to taxpayers, and ensure transparent public accountability. Despite supporters emphasizing its importance, critics contended that the program was a bailout for Wall Street.

The Impact of EESA

The EESA is widely praised for restoring stability and liquidity to the financial sector, unfreezing credit, and capital markets, and reducing borrowing costs for households and businesses. This restored confidence in the financial system and reinvigorated economic growth.

TARP Transactions

By 2017, the Congressional Budget Office (CBO) estimated that TARP transactions, largely influenced by the takeover of insurance giant AIG, cost taxpayers a little over $32 billion. The CBO reported that the federal government disbursed $313 billion, with most of it repaid by 2017. Overall, the government made a net gain of $9 billion from these transactions, including about $24 billion from assisting banks and lending institutions, partially offset by $15 billion of assistance to AIG.

Funds Repayment

The majority of funds distributed under the EESA have been repaid, resulting in a profit of more than $110 billion on loans and investments made by the Treasury. As of February 2021, ProPublica, a nonpartisan organization, reported that $443 billion had been disbursed under TARP in the form of investments, loans, and payouts, with $390 billion already repaid to the Treasury. Additionally, the Treasury earned $52.5 billion on these investments and loans, leading to a total profit of $110 billion to date.


The Emergency Economic Stabilization Act of 2008 and the Troubled Assets Relief Program were implemented to address the financial crisis and prevent the collapse of the financial system. While controversial at the time, the programs have been largely successful in restoring stability and liquidity to the markets and have resulted in a net gain for the government.

Emergency Economic Stabilization Act (EESA)
Congressional Budget Office (CBO)
Troubled Asset Relief Program (TARP)
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