Alphadictionary.com

TARP

Printable Version
Pronunciation: tahrp Hear it!

Part of Speech: Noun

Meaning: The Troubled Asset Relief Program of the Federal Government, whose purpose is to bolster the largest financial institutions in the US. The purpose was to raise the amount of capital available for loans needed to stabilize the economy, which was on the brink of a depression in the second half of 2008.

Notes: Regular tarps are used to cover valuables in order to protect them from the elements. TARP is a program introduced in October of 2008 to cover the rear ends of irresponsible bank and investment executives who had bought "toxic" assets, subprime mortgages either in default or on the brink of it. Under TARP, the United States Government purchased stock (or 'warrants', agreements to buy stock at a later date) in financial institutions equivalent to the percentage of high-risk mortgages held by those institutions, thereby providing endangered banks with funds to continue making loans.

In Play: As of July 20, 2009, the Treasury had spent $441 billion of TARP funds and allocated about $200 billion more. To repay the Government, a bank must negotiate a purchase price for the warrants that the Government holds. By July 20, 2009, about 30 banks had repaid roughly $80 billion to the Government. Goldman Sachs bought back the warrants for its TARP support from the Government at a 20 percent profit to the Government. Not all banks are expected to return that percentage, but the program should cost the Government little in return for saving the economy.

Word History: This Good if troubled Word is an acronym for Troubled Asset Relief Program as described above and will probably disappear from English in a few years. Many people think that many English words are based on acronyms. Actually, this process is rare. Most words that trace their origins back to acronyms are based on acronyms artificially created for that purpose, e.g. scuba from " self-contained underwater breathing apparatus" and laser, supposedly from "light amplification by stimulated emission of radiation". All such words are recent coinages.

Dr. Goodword, alphaDictionary.com

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