Tag Archives: economics

Good Bank, Bad Bank; Good Plan, Better Plan

Good Bank, Bad Bank; Good Plan, Better Plan

This is a good spin on the "bad bank" idea. But what I don't understand is why we need a bad bank at all. I thought the whole point of a bad bank would be to enable new capital investment in banks by clearing out their balance sheets. Well, the banks already received the new capital investment -- TARP funds. Why do they need to get the bad assets off of their balance sheets? They've got their new capital. Now, just hang on to the bad assets and liquidate them over the next several years, possibly at a profit -- just like the bad bank would do! What am I missing?