Congress Passes Emergency Economic Stabilization Act

On Oct. 3, 2008, Congress passed and sent to the President the Emergency Economic Stabilization Act of 2008 (the Act), which is targeted at increasing the stability of the U.S. economy by providing relief to financial institutions whose existence has been endangered by the national/worldwide credit crisis.

The Act establishes the Office of Financial Stability and a three-tranche program to purchase an aggregate of up to $700 billion in "troubled assets" (residential or commercial mortgages, and any securities or obligations based on such mortgages) from financial institutions as well as a program to insure the payment of principal and interest on such troubled assets to financial institutions. More information on this aspect of the Act is available at this link.