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 FINANCIAL CRISIS INQUIRY COMMISSION REPORT

lenders are continuing to lend. And so that is what this overall program does, it deals
with that.”  Bernanke told the Joint Economic Committee Wednesday: “I think that
this is the most significant financial crisis in the post-War period for the United
States, and it has in fact a global reach. . . . I think it is extraordinarily important to
understand that, as we have seen in many previous examples of different countries
and different times, choking up of credit is like taking the lifeblood away from the
economy.”  He told the House Financial Services Committee on the same day,
“People are saying, ‘Wall Street, what does it have to do with me?’ That is the way
they are thinking about it. Unfortunately, it has a lot to do with them. It will affect
their company, it will affect their job, it will affect their economy. That affects their
own lives, affects their ability to borrow and to save and to save for retirement and so
on.”  By the evening of Sunday, September , as bankers and regulators hammered
out Wachovia’s rescue, congressional negotiators had agreed on the outlines of a deal.
Senator Mel Martinez, a former HUD secretary and then a member of the Bank-
ing Committee, told the FCIC about a meeting with Paulson and Bernanke that
Sunday:

I just remember thinking, you know, Armageddon. The thing that was
the most frightening about it is that even with them asking for extraor-
dinary powers, that they were not at all assured that they could prevent
the kind of financial disaster that I think really was greater than the
Great Depression. . . . And obviously to a person like myself I think you
think, “Wow, if these guys that are in the middle of it and hold the titles
that they hold believe this to be as dark as they’re painting it, it must be
pretty darned dark.” 

Nevertheless, on Monday, September , just hours after Citigroup had an-
nounced its proposed government-assisted acquisition of Wachovia, the House re-
jected TARP by a vote of  to . The markets’ response was immediate: the Dow
Jones Industrial Average quickly plunged  points, or almost .
To broaden the bill’s appeal, TARP’s supporters made changes, including a tempo-
rary increase in the cap on FDIC’s deposit insurance coverage from , to
, per customer account.  On Wednesday evening, the Senate voted in favor
by a margin of  to . On Friday, October , the House agreed,  to , and
President George W. Bush signed the law, which had grown to  pages. TARP’s
stated goal was to restore liquidity and confidence in financial markets by providing
“authority for the Federal Government to purchase and insure certain types of trou-
bled assets for the purposes of providing stability to and preventing disruption in the
economy and financial system and protecting taxpayers.”  To provide oversight for
the  billion program, the legislation established the Congressional Oversight
Panel and the Office of the Special Inspector General for the Troubled Asset Relief
Program (SIGTARP).
But the markets continued to deteriorate. On Monday, October , the Dow closed
below , for the first time in four years; by the end of the week it was down al-