2008 US financial system bailout
American lawmakers proposed an initial bill for a United States financial system bailout. This measure, which involved the government acquiring or insuring as much as $700 billion of troubled mortgage-backed securities, was intended to reduce uncertainty regarding these assets and restore confidence in the credit markets. The bill was rejected by the United States House of Representatives on September 29th by a 228 to 205 margin.
Following several financial crises among major financial U.S. financial institutions in September 2008, including the federal takeover of Fannie Mae and Freddie Mac, the bankruptcy of Lehman Brothers, an emergency Federal Reserve loan to American International Group, and the January purchase of Countrywide Financial and merger of Merrill Lynch into Bank of America—events considered part of the on-going financial crisis of 2007–2008—the United States Secretary of the Treasury Henry Paulson proposed a plan under which the U.S. Treasury would be authorized to acquire mortgage backed securities that are backed by troubled housing loans, with the outstanding balance of acquired assets not to exceed $700 Billion at any time. The plan was immediately backed by President George W. Bush and negotiations began with leaders in the United States Congress to draft appropriate legislation. Proponents of the plan argue that the urgent, dramatic intervention called for by the plan is vital to prevent further erosion of confidence in the U.S. credit markets and that failure to act could lead to a significant downturn in the economy. Opponents object to the massive cost of the plan and point to polls that show little support among the public for bailing out Wall Street investment banks.
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