Amid reports that the government’s plan to remove toxic assets from U.S. banks is floundering, the world’s largest accounting firm came out with a report this week saying that a “bad bank” solution is probably inevitable.
Major indicators of asset quality at U.S. banks continued to deteriorate in the first quarter, the Federal Deposit Insurance Corp. said in its quarterly report on the banking system.
While financial markets and analysts are generally relieved that stress tests administered to the nation’s 19 largest banks show the situation to be manageable, skeptics question whether the results tell the full story. Toxic assets are one area that remain particularly opaque.
The administration’s complex program to remove toxic assets from banks’ balance sheets drew a step closer to reality with the announcement this week that more than 100 potential fund managers had applied for the securities program.
Thursday 02 April 2009 19:46 | William Bates, Vice President for Government Affairs, Council for Competitiveness | 180 comments
Banks’ ability to support these investments is hamstrung by the gap between their value of toxic assets and what others will pay. In other words, an organization ready to buy is a first step, but the deal isn’t done, yet.
