In the midst of the 2008 financial crisis, how did the Federal Reserve and the Treasury Department turn the tide?

On September 17, 2008, as the situation deteriorated further, in order to protect the stability of the financial system and reduce systemic financial risks, Paulson and others decided that they must apply to Congress for emergency authorization and fiscal powers to deal with the crisis. Paulson told people in the Ministry of Finance that we must find a way to stabilize the financial system ahead of the market and prevent several other institutions from going bankrupt one after another. "Now it's a critical moment. We must succeed in fighting the fire this time. Now we have to hit the weak spot of this crisis directly."

On September 19, the US government issued a new package of policies to support liquidity and stabilize the market. The Ministry of Finance guarantees money market funds with exchange rate stabilization funds to prevent investors from withdrawing funds from money market funds. The Federal Reserve issued the Asset-Backed Commercial Paper Money Market Funding Facility (the Fed makes non-recourse loans to U.S. depository institutions and bank holding companies to finance their purchases of high-quality asset-backed commercial paper from money market mutual funds).

In another move to support liquidity, the Fed announced that it would buy short-term debt from Fannie Mae and Freddie Mac. The SEC issued an order banning short selling in 799 financial stocks for 10 trading days, an order that can be extended to 30 days (the list left out several large companies, which the SEC added later).

Under the efforts of Paulson, Bernanke, etc., in October 2008, the "Economic Emergency Stabilization Act of 2008" passed by Congress and signed by Bush was introduced. The Department's $700 billion fund is used for asset guarantees and the purchase of problematic assets to help crisis banks digest toxic assets.