Question

question 2 of 10

what was the main purpose of president bushs 2008 emergency economic stabilization act (eesa)?

a. to keep americas large banks from failing during the subprime mortgage crisis of 2007 and 2008
b. to expand state-based medicaid coverage to include americans below, at, or near the poverty line
c. to bail out large banks by purchasing assets that lost value in the early months of the recession
d. to bail out the auto industry by loaning money to car companies so they could avoid bankruptcy and job losses

Explanation:

Identify the core purpose of the Emergency Economic Stabilization Act (EESA)

The Emergency Economic Stabilization Act of 2008 was enacted in response to the subprime mortgage crisis to stabilize the financial system. Its primary mechanism was the Troubled Asset Relief Program (TARP), which authorized the U.S. Treasury to purchase toxic assets—specifically troubled mortgage-backed securities—from financial institutions to prevent a systemic banking collapse.

Evaluate the given options against historical facts

• Option A describes preventing banks from failing generally, but lacks the specific mechanism of purchasing devalued assets.
• Option B describes Medicaid expansion, which is unrelated to financial stabilization.
• Option C directly describes bailing out large banks by purchasing assets that lost value (toxic assets) during the early months of the recession, which was the core mechanism of TARP under EESA.
• Option D describes the auto industry bailout, which was a subsequent, separate application of funds rather than the main statutory purpose of the EESA.

Answer:

• (A) To keep America's large banks from failing during the subprime mortgage crisis of 2007 and 2008
• (B) To expand state-based Medicaid coverage to include Americans below, at, or near the poverty line
• (C) To bail out large banks by purchasing assets that lost value in the early months of the recession (Correct answer)
• (D) To bail out the auto industry by loaning money to car companies so they could avoid bankruptcy and job losses