Locking Up Bad Debt In Bad Banks Gains Backers

Law360, New York (January 28, 2009, 12:00 AM EST) -- With banks continuing to face daunting write-downs, President Obama's administration is said to be looking at a mechanism of sequestering troubled mortgage-backed securities and other troubled assets while allowing financial institutions to keep good assets in their possession, according to media reports.

Under this good bank, bad bank scenario, the government would set up its own banks that would purchase toxic securities from financial institutions and attempt to sell them. After the toxic assets are excised from the balance sheets, banks that could still survive would...
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