Who Was Herbert M. Allison, Jr.? What Was His Role in the 2008 Financial Crisis Bailout?

Herbert M. Allison, Jr. was in charge of the Troubled Asset Relief Program (TARP) from 2009 to 2010, a federal program that helped stem pain from the 2008 financial crisis and lead to its ultimate recovery. He was named CEO of Fannie Mae in 2008 when the company went into conservatorship. Before Fannie Mae, he was the CEO of TIAA-CREF from 2002 to 2008. Allison, Jr., began his career with Merrill Lynch and worked there for 28 years.

He passed away at his home in Westport, Conn., in 2013 at the age of 69.

Key Takeaways

Herbert M. Allison, Jr., ran the TARP program from 2009 to 2010, which he credited with saving the economy.
Allison spent nearly three decades with Merrill Lynch, where he held such positions as CFO and COO.
He also became the CEO of Fannie Mae in 2008 when it went into conservatorship.
Allison passed away in 2013 at the age of 69.

Herbert M. Allison Jr. — Investopedia / Alex Dos Diaz

Early Life, Education, and Career

Allison was previously a director at Time Warner, Merrill Lynch, Financial Engines, and the New York Stock Exchange. He was born in Pittsburgh in 1943, and after graduating from Yale University in 1965, he spent four years in Vietnam as a member of the U.S. Navy. Afterward, he earned an MBA from Stanford University in 1971.

Allison worked for Merrill Lynch as an investment banking associate and then held various high-level positions with the bank, including chief financial officer and chief operating officer. While at Merrill Lynch, Allison headed up the effort to bail out Long-Term Capital Management (LTCM), the hedge fund that famously imploded in 1998. After leaving Merrill Lynch in 1999, he served as John McCain’s National Finance Chair. Later, he went to work as CEO of TIAA-CREF before retiring in 2008.

After Allison retired from TIAA-CREF in 2008, he was reportedly on vacation when he got the call from then-Treasury Secretary Hank Paulson to come to Washington DC. From there he took over as CEO of the distressed mortgage lender Fannie Mae. He famously only took a dollar per year as a salary.

Herbert M. Allison, Jr., had a long history of dealing with some of the finance industry’s biggest crises, including LTCM, the financial crisis and TARP, and Fannie Mae.

Notable Accomplishments

In the wake of the 2008 financial crisis, Allison was tapped to take over oversight of the TARP program in 2009 when he became the senior Treasury official in charge of the Office of Financial Stability. The Troubled Asset Relief Program (TARP) was authorized by the Emergency Economic Stabilization Act of 2008, which was signed into law by President George W. Bush on Oct. 3, 2008. TARP was administered by the Department of the Treasury and was designed to address the financial crisis by providing financial assistance to struggling financial institutions and stabilizing financial markets.

Under TARP, the government was authorized to provide financial support to banks, mortgage companies, and other financial institutions in the form of loans, investments, and guarantees. The program also included a number of initiatives to help homeowners who were struggling to make their mortgage payments, such as the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP).

In addition to these provisions, TARP also authorized the government to purchase "troubled assets," which were defined as mortgage-related securities and other assets that were causing financial instability. The goal of this provision was to stabilize financial markets and prevent a further decline in economic activity.

Allison stepped down from that position in 2010, noting that TARP helped save the economy. In 2011, he worked for President Obama assessing federal loans to energy companies. Allison also wrote the e-book The Megabanks Mess, and called for a controversial breakup of the industry’s biggest banks.

$426.4 billion

The amount of funds invested as part of the TARP program. Over $441 billion was recovered from the TARP assets.

What Was the TARP Program?

The Troubled Asset Relief Program (TARP) was a financial stability plan implemented by the United States government in response to the financial crisis that occurred in 2008. The program was established by the Emergency Economic Stabilization Act of 2008, which was signed into law by President George W. Bush. TARP was administered by the Department of the Treasury and was designed to address the financial crisis by providing financial assistance to struggling financial institutions and stabilizing financial markets.

Under the TARP program, the government provided financial support to banks, mortgage companies, and other financial institutions in the form of loans, investments, and guarantees. The goal of TARP was to restore confidence in the financial system, stabilize financial markets, and prevent a further decline in economic activity. TARP also included a number of initiatives to help homeowners who were struggling to make their mortgage payments, such as the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP).

Herbert M. Allison Jr. served as the Assistant Secretary of the Treasury for Financial Stability from 2009 to 2010 and oversaw the implementation of TARP.

Who Else Was Important to the TARP Program?

There were several other key figures who played important roles in the Troubled Asset Relief Program (TARP) during the financial crisis of 2008.

Henry Paulson was the Secretary of the Treasury at the time TARP was implemented. He was instrumental in developing the program and advocating for its passage by Congress.
Ben Bernanke was the Chairman of the Federal Reserve at the time of the financial crisis. He played a key role in the response to the crisis, including the implementation of TARP.
Timothy Geithner was the President of the Federal Reserve Bank of New York at the time of the financial crisis. He played a significant role in the response to the crisis, including the implementation of TARP. He later served as the Secretary of the Treasury under President Barack Obama starting in 2009.

There were also many other individuals who were involved in the development and implementation of TARP, including officials from the Department of the Treasury, the Federal Reserve, and other government agencies.

What Was Herbert Allison's Role in Implementing TARP?

In his role as Assistant Secretary of the Treasury, Allison worked closely with Treasury Secretaries Henry Paulson and Timothy Geithner, and other officials to implement TARP and ensure that it was carried out effectively. His role included working with financial institutions to provide financial assistance in the form of loans, investments, and guarantees, as well as overseeing initiatives to help homeowners who were struggling to make their mortgage payments, such as the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP).

In addition to his responsibilities directly related to TARP, Allison also played a key role in other efforts to address the financial crisis, including working with Congress to pass legislation related to financial stability and helping to develop plans to stabilize the housing market. He also served as a key spokesperson for the program, explaining its objectives and accomplishments to the public and working to build support for the program.

The Bottom Line

Herbert M. Allison Jr. was an American businessman and government official. He served as the Assistant Secretary of the Treasury for Financial Stability from 2009 to 2010, during the administration of President Barack Obama. In this role, he oversaw the Troubled Asset Relief Program (TARP), a government initiative to address the financial crisis that occurred in 2008. Prior to his work in government, Allison was a prominent figure in the financial industry, serving as the CEO of Fannie Mae and as the president and CEO of investment firm TIAA-CREF.