Essay: Actions Taken by U.S. Treasury to Solve the Financial Crisis

Sample Essay

The major step taken by the U.S. Treasury immediately after the collapse of Lehman Brothers was to propose a $700 billion emergency bailout package for the financial crisis. The Emergency Economic Stabilization Act authorizes the Treasury to spend $700 billion to increase liquidity of the banks and purchase suffering assets, like mortgage backed securities and provide capital to the banks. The Bill was approved by the Senate and Congress and signed by President Bush within hours of enactment (Clark).

In September the U.S Treasury took control of Fannie Mae and Freddie Mac to ease the financial pressure. In 2009 the U.S. Treasury proposed a $787 billion stimulus plan backed by the Obama administration which was approved by the Congress as the American Recovery and Reinvestment Act of 2009 to help in the recovery from the financial crisis. The plan involves provisions of spending, tax cuts and aid to families of the workers laid off in the aftermath of the financial crisis (Hitt and Weisman). As mentioned in the answer to the previous question the Treasury also highlighted the need of improved cooperation with Federal Reserve to resolve the crisis in a joint statement with the Federal Reserve.

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