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With a view to contain the global financial crisis, the Emergency Economic Stabilization Act (EESA) was enacted by the Congress and signed into law by former President Bush on October 3, 2008. The Act authorized the Troubled Asset Relief Program (TARP) that would enable the Treasury to purchase (and/or insure) assets (and/or equity) from banks and financial institutions up to USD 700 billion. The regulatory agencies will have to monitor the usage of TARP funds and use this opportunity to create a stable financial system. While this program is designed help banks stabilize their balance sheets, it would result in a substantial regulatory burden. This paper aims to analyze the steps that regulators are likely to take and examines the impact of additional regulatory requirements on banks.
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