Two years ago the U.S. economy had many symptoms of a bubble ready to burst-runaway stock prices, rapidly inflating real estate prices, and interest rates that encouraged many homeowners to refinance (that's a synonym for "take unnecessary risks with") their most valuable assets. One symptom, however, wasn't revealed until it was too late: a troubling practice among banks to bundle assets-including mortgages, many of which were shakyand sell them to investors who weren't fully aware of the bundles' contents.

So the bubble burst. The Dow Jones Industrial Average fell from 14,000 to 6,500 in 18 months; new-home construction, which was a healthy 1,192,000 (the annual rate) in October 2007 was less than half that at 551,000 in October 2009; the unemployment rate doubled from 4.8 percent to 10.2 percent in the same time frame; and the economy tanked.

The crisis began to emerge early in 2008, and in October that year the U.S. government passed Public Law 110-343 (based on H.R. 1424), the Emergency Economic Stabilization Act (EESA) which included the Troubled Asset Relief Program (TARP). Intended to purchase assets and equity from financial institutions, TARP enabled the Treasury Department to use $700 billion to rescue and strengthen the financial sector. Although TARP was to expire on Dec. 31, 2009, Treasury Secretary Timothy Geithner recently used his authority to extend TARP until October 2010.

Was this really necessary?
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