During the latter part of 2008 the financial stability of the US was confronted with significant setbacks as the financial industry was rocked by sudden changes in the world’s financial system. Confusion tainted lots of newly developed financial instruments resulted in massive movements in prices across the world.

The effect was so destructive that one prestigious financial titan, Lehman Brothers, had to file for bankruptcy. Several other big banks avoided a similar end only by being bought by competitors at a fraction of the price they would have commanded not a short time before.

Many economists predicted that the situation was so bad that a depression similar to that of the 1930’s was not only possible but even likely. In response the US congress felt compelled to act and the legislature wasted no time and approved a financial recovery package to help the economy avoid a massive recession.

Congress has called for two types of cash to be spent; 1 was meant for the banks and related financial companies and the second was for the general economy. The purpose of the legislation was to accomplish two things; quickly lower the current risks to the banking system and also create much needed stimulation to the economy to lessen the effect of a recession.

The program was quickly ratified with subsequent administrations and congresses increasing the size of a number of the recovery packages initially implemented. The financial firms were able to benefit from plans including the TARP that helped them to rid themselves of assets which had turned into a burden on their balance sheet.

Congress also maintained their continuing support to bailing out the banks by developing policy closely with them and other distressed economies around the globe. Economic policy such as tax rates and monetary policy were altered to support the banks.

Additional sectors of the US economy were also earmarked funding in the government stimulus grants package. Vast amounts of cash were earmarked to encourage growth in many fields such as environmental, criminal justice, and energy.

Funding was also used to set up education programs to help Americans out of work because of the financial recession. Public funding was spread around the domestic economy through lots of avenues such as prolonged unemployment insurance and payments to state governments.

Congress’s bid to aid the US economy to avoid disaster was a highly debated choice at the time and remains so now. Some thought the dangers to the economy were not as bad as many economists suggested while other detractors agreed with the possible risks but felt the proposed cure ineffective. Whatever side of the debate may ultimately prove accurate it will most likely be many years and billions used before anybody knows which it is.

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