Definition of Tarp

The Troubled Asset Relief Program (Tarp) commenced in October 2008 as a means whereby the US Treasury could buy illiquid assets from banks and other financial institutions, thus allowing them to stabilise their balance sheets. The scheme was introduced in the wake of the US subprime scandal, so a significant proportion of the derivatives that have been purchased by the US Treasury are linked to debt obligations covering underlying property loans. [1]

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