In response to a near catastrophic collapse of the nation's credit markets, Congress and the President signed into law The Emergency Economic Stabilization Amendment on October 3, 2008. The stated goal of this new legislation is to remove troubled assets from the books of banks by a massive infusion of funding. By removing these troubled assets the hope is that the credit markets will begin to flow once more.
Why do it? In a word, history. Financial markets in crisis have occurred many times in developed economies. From Sweden in the 1990s to the U.S. Savings & Loan troubles, government intervention has been credited with minimizing the economic impact of troubles in the financial markets. It is hoped that by removing troubled assets fro