To address the deepening banking crisis, U.S. Treasury Secretary Henry Paulson (a former CEO of investment bank Goldman Sachs) proposed a $700 billion government expenditure to buy troubled assets from banks and finance companies, possibly worldwide, with very little oversight or review.

On February 4, 2009, President Barack Obama announced strict new caps on executive pay for companies receiving bailout money. Obama imposed a $500,000 cap for executives, saying he wanted to "take the air out of golden parachutes."CNN: Obama sets executive pay limits (February 4, 2009) FOX News: Obama Caps Executive Salaries for Bailed-Out Firms at $500G (February 4, 2009)

1. 2008: Automaker bailout - $14 billion
2. 2008: Citigroup bailout - $247.5 billion
3. 2008: Wall Street bailout - $700 billion
4. 2008: AIG bailout - $150 billion
5. 2008: Fannie Mae and Freddie Mac bailout - $200 billion
6. 2008: Bear Stearns - $30 billion
7. 2001: Airline industry - $18.6 billion
8. 1989: Savings and loan - $293.3 billion
9. 1984: Continental Illinois Bank - $9.5 billion
10. 1980: Chrysler - $4.0 billion
11. 1975: New York City - $9.4 billion
12. 1974: Franklin National Bank - $7.8 billion
13. 1971: Lockheed Martin - $1.4 billion
14. 1970: Penn Central Railroad - $3.2 billionPropublica.org: History of Government Bailouts

Despite an initial rejection by Republican members of the U.S. Senate, the TARP (Troubled Assets Relief Program) measure was rushed through Congress in late September 2008. To date, $350 billion of the bailout has been spent, and Congress has since complained that the money was lent to banks with few strings and no transparency requirements.

On January 13, 2009, Barack Obama and leaders of the U.S. Senate and House of Representatives began discussing how the second half of the $700 billion bailout would be spent. Congress' disappointment with the way the first $350 billion has been spent has largely to do with how the U.S. Treasury Department made loans to banks with few strings attached and with no way of forcing the banks to tell the government what the money was used for.CNN Money: Obama: Give me the money (January 12, 2009)

Obama listed his priorities as follows: Get credit flowing to consumers and businesses, reform the oversight of the TARP program, reduce foreclosures, toughen conditions for bailout recipients, and attract private capital resources.CNN Money: Obama: Give me the money (January 12, 2009)

On January 15, 2009, the Senate voted 52-42 against a measure that would have stopped the second half of the $700 billion bank bailout from being released, while the House approved an amendment that would impose conditions on how the money is spent.Market Watch: Senate clears path for $350 billion... (January 15, 2009)

The funds became available when Obama took office on January 20, 2009.CNN Money: Obama: Give me the money (January 12, 2009)

Federal Reserve Vice Chairman Donald Kohn went before the House Financial Services Committee at a hearing held on January 14, 2009. During the hearing, Kohn faced tough questions from freshman Florida Congressman Alan Grayson. Grayson wanted to know details about where the $1.2 trillion in bailout money was going. Kohn said revealing the names of individual institutions receiving the money could undermine the plan, saying "if we published the individual names of who was borrowing from us, no one would borrow from us."Huffington Post: Fed Official Confronted Over Bailout Spending Secrecy (January 14, 2009)