without enough cash to pay out its lehman-related debts, aig went under and was nationalized. credit markets locked up and catastrophe seemed all too likely. paulson proposed providing liquidity to financial markets by having the government buy up debt related to bad mortgages with a $700 billion troubled asset relief program. congressional democrats advocated an alternative policy of investing in financial companies directly. congress passed the emergency economic stabilization act of 2008, which authorized both policies.