In mid-2007, financial companies wrote down billions in mortgage-related assets. In Jan. 2008, we hammered out a plan to provide temporary tax incentives to create jobs & boost consumer spending. I was hopeful we could dodge a recession. I was wrong. The foundation was weakening, and the house of cards was about to come tumbling down.
In March, we learned that Bear-Stearns was overexposed. I was surprised by the sudden crisis. The Fed lent $30 billion against Bear's undesirable mortgage holdings. Many denounced the move as a bailout.
In September, we laid out a plan to place Fannie Mae and Freddie Mac into government conservatorship.
On Sep. 15, we allowed Lehman Brothers to file for bankruptcy. Legislators praised our decision not to intervene. The stock market was not so positive.
The NY Fed lent AIG $85 billion in return for 79% of AIG's shares.
On Sep. 18 we launched a new lending vehicle to restart the commercial paper market--the initiative that would become known as TARP.
Source: Decision Points, by Pres. George W. Bush, p.452-458 Nov 9, 2010
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