Posted in Finance, Accounting and Economics Terms, Total Reads: 488
Definition: TARP Bonuses
This refers to the bonuses paid to various top executives of banks and other financial institutions that received Tarp (Troubled Asset Relief Program) fund during the financial crisis of 2008/09.
This was a very controversial practice done by many banks and financial institutions who received bailout packages in the form of Troubled Asset Relief Program fund. Firstly, the bailout package was given mainly to restore the financial stability of the United States and to improve the confidence in lending and also to decrease the effect of recession globally.
But the money from the tarp fund was funneled to pay hefty bonuses to executives and employees of the financial institutions rather than for lending. It was simply a bad use of the taxpayer’s money. After the collapse of the financial system, this was seen as adding to the chaos. Some of the data that is present with respect to Tarp Bonuses reveals that the lending fell for the banks and financial institutions that were given Tarp fund as compared to the banks and financial institutions where the Tarp fund was not given. So, the Tarp fund was used in a negative manner and the banking system was going into more chaos. Also, one research showed that the employees pay rose for the banks that were part of Tarp fund as compared to bank and financial institutions that were not part of tarp fund.