TARP provisions in regulating investment banking compensation structure

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ACKNOWLEDGEMENT

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I, [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

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ABSTRACT

The TARP provisions that are known as (Troubled Asset Relief Program) were adopted after the US Economy was hit by the Economic Crisis that occurred in September 2008. The Banking sector got badly affected with this crisis as the major banks of US faced bankruptcy. The US Government then launched a bailout plan for the recovery of their Economy and restructuring of their Banking sector that needed revival at that time. In this research, an evaluation and critique of regulatory changes to the US Financial framework post the US sub-prime crisis 2008 will be carried out. TARP provisions have proved to be quite effective in managing the problems that occurred after the Economic Crisis in USA. The major factor that has been assessed is the contribution made by Obama's Administration to resolve the crisis. However, the economists in USA would need to prepare much better strategies regarding TARP to handle the economy in a much better way.

TABLE OF CONTENTS

ACKNOWLEDGEMENTii

DECLARATIONiii

ABSTRACTiv

CHAPTER 1: INTRODUCTION1

CHAPTER 2: LITERATURE REVIEW2

Origin of the Crisis2

Evolution of the crisis2

CHAPTER 4: DISCUSSION AND ANALYSIS8

CHAPTER 5: CONCLUSION10

REFERENCES11

CHAPTER 1: INTRODUCTION

The Troubled Asset Relief Program (TARP) involves the purchase of U.S. government assets and securities from financial institutions, to support the financial sector. It was the largest component of government measures taken in autumn 2008 to rescue the U.S. economy from the mortgage crisis. The redemption is called the legacy loans - loans to banks but is suitable for ransom, and legacy securities. The director of photography that deals with these assets is the Federal Deposit Insurance Corporation bank (FDIC - Federal Deposit Insurance Corporation) which determines the amount of guaranteed funding for each transaction, and financial leverage of the transaction may not exceed. The scheme is as follows: half of the required capital gets a private investor who offers the highest bid for the troubled loans. Bank-seller accepts the proposed price of the asset, and then the buyer - a private investor receives the necessary amount of funding from the FDIC. Redeeming legacy securities used a similar scheme funding, the only source of funds is the Federal Reserve and fund TALF (Term Asset-Backed Securities Loan Facility). Therefore, this is the reason because of which TARP Provision was implemented by the US Government to recover from their problems. The overall application of TARP Provision will be discussed in detail in this topic.

CHAPTER 2: LITERATURE REVIEW

Origin of the Crisis

The brinkmanship of the major U.S. banks in granting loans and subprime mortgages linked to the lack of supervision ...