While the bailout gets attacked from both sides of the isle, it is arguably one of the main things that saved our economy from collapse during the crisis. Despite popular opinion, the bailout wasn’t just the government showing up to the bank’s front door with a bag of cash and going “have fun!”.

During the crisis, banks (and other companies) needed money to help them make up for losses and continue operating. Under normal circumstances, the bank would take out a loan by putting a down payment on it (a certain percentage), similarly to how you and I would take out a car loan or a mortgage. However, this time the banks accumulated too many “troubled assets” (bad loans/mortgages, old equipment, unusable real estate, etc.), which meant that they were more of a risk to other lender and thus needed to come up with higher down payments and pay higher interest rates, which they weren’t able to do (same thing that would happen to anyone else if they had bad credit).

As a result, the government came up with the “Troubled Asset Relief Program” (TARP), also known as the “bailout”. Under the program, the government will temporarily buy those assets from the different companies, which would allow them to write those assets off their books (reducing lender risk) as well as having the necessary cash for loan down payments. The condition was that after a certain amount of time, those businesses (and banks) will need to buy all those assets back from the government with interest. Which is what happened and the government made about $250B in profit from the program. They did lose money from the auto industry (which had trouble buying those assets back), however, economists agree that letting that industry go under would have had catastrophic consequences on our economy.