https://macropaperwarehouse.com/authors/allen-n.-berger/Allen N. BergerHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/a-tale-of-two-bailouts-and-their-impact-on-subprime-consumer-debt/https://macropaperwarehouse.com/papers/a-tale-of-two-bailouts-and-their-impact-on-subprime-consumer-debt/<p>This paper examines the effects of the Troubled Asset Relief Program (TARP) and the Paycheck Protection Program (PPP)—two government bailout programs during the Global Financial Crisis and the COVID-19 crisis, respectively—on subprime consumer debt, using over 11 million credit bureau observations of individual consumer debt combined with banking, bailout, and local market data. TARP and PPP are found to have opposite effects: subprime consumers in markets with more TARP institutions experienced significantly increased debt burdens following the bailouts, while PPP was associated with reduced subprime consumer debt. Both programs are treated as quasi-natural experiments due to their rapid, largely unanticipated assembly. The findings yield policy implications regarding bailout structures and the conditions attached to bailout funds.</p>