How do federal financial interventions, such as the Emergency Economic Stabilization Act of 2008, affect the national accounts?
During 2008, the federal government has intervened several times in financial markets to restore confidence, to provide liquidity or capital, or to avoid the collapse of a bankrupt or nearly bankrupt corporation or other entity. Typically, a financial intervention involves transactions between an entity and the Department of the Treasury, the Federal Reserve, or another government agency. The federal assistance may involve direct payments, loans, loan guarantees, or the purchase of financial securities. Direct payments: In the national accounts, a direct payment from a federal agency to a business to support current production or operations is classified as a subsidy, while a payment associated with the acquisition or disposal of an asset is classified as a capital transfer. Direct payments made to state or local governments are classified as grants or capital transfers. Loans and purchases of financial securities: Loans and purchases of financial assets are not recorded in the nationa
