Corrective Actions of the Great Recession

Topics: Great Depression, United States, Barack Obama Pages: 5 (1692 words) Published: April 26, 2013
When did corrective actions begin?

When President Barack Obama was sworn in on January 20, 2009 he brought with him a plan and an execution of ideas to bring the United States of America out of the Great Recession. This did not take just one or two plans; it took hundreds of acts, reforms, bills, and advice from the Department of Treasury. The American Recovery and Reinvestment Act of 2009 is the umbrella to all of these plans to push the United States of America into the right direction. The American Recovery and Reinvestment Act of 2009 were signed into law by our President on February 17th 2009 and this is when the corrective action officially began. Its plan was to boost our economy to get our country out of the Great Recession. This Recovery Act was implemented by the Department of Treasury; it includes the Economic Recovery Act Payments, Community Development Financial Institutions, New Markets Tax Credit, Health Insurance Tax Credit Administration, Energy Grants in Lieu of Tax Credits, 1602 Program: Payments to States for Low-Income Housing Projects in Lieu of Low-Income Housing, Tax Credits, Native American CDFI Assistance, Tax Provision Oversight, and Tax Relief Programs. President Obama wanted the Department of Treasury to move and implement their programs with the Keynesian theory in mind. The Keynesian theory was used during the Great Depression in the 20th century to pull the United States out of this lowest economic period. The Keynesian theory is from an Economist named John Maynard Keynes; this theory says that if the people of the United States can’t fix itself than the government needs to come in and fix everything in the business cycle. This theory comes in the form of government spending and tax breaks to stimulate the economy, and government spending cuts and tax increase during a good economy, in order to help the inflation. The United States housing market correction and the mortgage crisis is the biggest contribution to the recession.

Who started the corrective actions?

Corrective actions were implemented by President Barack Obama and delivered through many. When the American Recovery and Reinvestment Act of 2009 were signed it asked for many aspects of our economy to be looked at and fixed. The Obama Administration worked with the Federal Reserve and the FDIC (Federal Deposit Insurance Corporation) to help the financial system. There were nineteen of the largest banking institutions that did a “stress test” and two Comprehensive Capital Analysis and Review (CCAR); this gave an analysis and an evaluation of how well these institutions were working and sent to the Obama Administration. The Department of the Treasury also worked with the Federal Reserve to help reduce mortgage interest rates; this resulted in lowering mortgage payments for millions of Americans that refinanced their homes. Homeowners that were facing home foreclosures were key players, in finding the new programs, which would help them get more manageable mortgage payments. Monetary policy makers helped to reduce the interest rates to nearly zero. The Counsel of Economic Advisers played their role during the beginning middle and end of the Great Recession recovery.

What were the corrective actions?

Upon the signing of the American Recovery and Reinvestment Act of 2009 there were many players and many goals in correcting the Great Recession. The actions that helped reach the goals of the United States included the Federal Reserve bank makes promises to buy five-hundred-billion dollars worth of mortgage backed securities and a hundred-billion dollars of their direct debt and buys mortgaged back securities that were guaranteed by Fannie Mae and Freddie Mac. The Congress approved the stimulus package, which is the American Recovery and Reinvestment Act of 2009 an eight-hundred-thirty-nine billion dollars worth of a stimulus package. The government implements the Financial Stability Plan that was to restore confidence into...
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