Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.
On this day 11 years ago, U.S. President George W. Bush signed the $700 billion Troubled Asset Relief Program bailout into law.
Where The Market Was
The Dow closed at 10,325.38 and the S&P 500 traded at 1,099.23.
What Else Was Going On In The World
In 2008, the largest U.S. bank, Citigroup Inc (NYSE: C), reported fourth-quarter losses of $9.83 billion due to the collapse of the subprime mortgage market. Illinois governor Rod Blagojevich was arrested on charges of corruption, conspiracy to commit mail and wire fraud and solicitation of bribery. A gallon of gasoline cost $3.39.
Big Bank Bailout
At the time, the fear in Washington was that the bursting of the subprime mortgage bubble would result in the collapse of the U.S. banking system. The TARP program set aside $700 billion in capital that banks could use to keep the financial system liquid.
At the time, TARP did nothing to ease market fears. From Oct. 2 to Oct. 10, 2008, the S&P 500 crashed 19.3%.
Only about $441 billion of the $700 billion was ever deployed. Despite harsh criticism from fiscal conservatives at the time, the TARP bailouts were ultimately a huge success. In addition to preventing the collapse of the U.S. economy, the TARP bailouts and separate crisis bailouts of Federal National Mortgage Association (OTC: FNMA) and Federal Home Loan Mortgage Corp (OTC: FMCC) have generated a net profit of $97.1 billion for U.S. taxpayers.
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