How much bailout money was given

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This month MBA program equips experienced executives to enhance their impact on their organizations and the world. Ask three people their opinion of the U. Policymakers from that time argue that bailing out critical financial institutions was necessary to stave off an even greater meltdown.

Others maintain the government should have taken even more aggressive actions — to save Lehman Brothers, for instance, or rescue homeowners with underwater mortgages. In contrast, a Forbes article claimed the U. None of those numbers are accurate, according to Deborah J. All of the figures below have been adjusted for inflation. For example, Lockheed Martin ran into financial difficulties in because the planes, helicopters and other military equipment it was making for the U.

Department of Defense cost more than the Pentagon agreed to pay, which led to significant losses and fees. The defense contractor pinned its survival on making money off its state-of-the-art TriStar airliner but struggled to secure enough financing to finish the project.

Congress, concerned with the loss of at least 25, jobs if Lockheed went bankrupt, provided Lockheed with a lifeline in the form of loan guarantees. Similarly, automaker Chrysler found itself in financial peril in late in part due to its slow reaction to market shifts brought about by the s energy crisis. Consumers wanted more fuel efficient cars; Chrysler made too many gas guzzlers. Post-bailout studies suggested the company was headed toward insolvency.

As a precondition for this help, Chrysler, in addition to paying fees on the loans, granted the U. To keep people in their homes, the government created the Home Owners' Loan Corporation, which bought defaulted mortgages from banks and refinanced them at lower rates.

The program helped one million families benefit from lower rates on refinanced mortgages. Because there was no secondary market , the government held the mortgages until they were paid off. The government created a number of other programs to help the nation weather the Great Depression. While these initiatives were not bailouts, strictly speaking, they provided money and support to create tens of thousands of new jobs, principally in public works.

Some of these projects included:. Armed with a steady income, millions of re-employed workers began purchasing again and the economy recovered slowly. When the U. Many were insolvent by the early s, but customers kept banking with them because they knew their deposits were insured. In addition, regulators allowed zombie banks to continue operating in hopes they would eventually return to profitability. Loan defaults ran into the billions, and billions more were spent to cover federally insured deposits.

Congress took several measures to address the crisis, such as passing the Financial Institutions Reform, Recovery and Enforcement Act of and creating the Resolution Trust Corporation to sell off assets.

The Financial Crisis resulted in an unprecedented federal intervention to rescue banks and restore confidence to the finance sector. The chief culprit in the crisis was the implosion of mortgage-backed securities MBS and the collapse of the housing market that threatened many companies with insolvency.

In the early days of the crisis, no one knew which companies were holding toxic assets and who would be next to falter. Lack of trust spread, with market participants unwilling to take on counterparty risk.

As a result, companies were prevented from accessing credit to meet their liquidity needs. The Treasury Department later sold those shares back for a profit. The implosion of the housing market also brought trouble to Fannie Mae and Freddie Mac, two government-sponsored enterprises charged with promoting homeownership by providing liquidity to the housing market.

Fannie and Freddie play a vital role in the housing market by purchasing mortgages from lenders and guaranteeing loans. Deterioration in their finances meant neither could service their obligations. This required Fannie and Freddie to pay dividends to the government ahead of all other shareholders. The lifeline extended by the Treasury Department gave both time to clean up their finances.

The two reported losses between and , returning to profitability in Mortgage-related losses took their toll on Bear Stearns, prompting the Federal Reserve to step in to prevent its collapse in Its collapse, it was feared, posed systemic risks to the market.

This corporation, Maiden Lane I, then repaid the Fed interest and principal using proceeds from the sale of those assets. During the financial crisis, the government took control of American International Group AIG to prevent the fifth-largest insurer in the world from going bankrupt.

Funds set aside to insure against bank's potential losses from mortgage-backed securities investments. Purchases of short-term corporate debt aimed at boosting the struggling market and providing critical three-month financing to businesses. Exchange of dollars to 13 foreign central banks for collateral. Aim is to provide liquidity to foreign financial institutions. Program to buy debt issued by Fannie Mae and Freddie Mac.

Aim is to reduce rates on home loans. Program to buy mortgage-backed securities held by Fannie Mae and Freddie Mac. Long-time lending facility for commercial banks that was opened to investment banks for first time in March Program to buy consumer loan-backed securities.

Aim is to revive the securitization market for consumer loans like credit cards and auto loans. Lending program that allows commercial banks to unload hard-to-sell assets, including mortgage-backed securities: Fed takes assets as collateral and banks get cash.

Federal Reserve facility that loans Treasurys to banks against hard-to-sell collateral like mortgage-backed securities. Economic Stimulus Act of Rebates for individuals Tax breaks for businesses. Businesses also received tax breaks. Federal funds to extend benefits for the unemployed.