U.S. will eventually adopt 'bad bank' plan, PWC says

Discussion in 'Wall St. News' started by ASusilovic, May 27, 2009.

  1. The U.S. government will eventually adopt a "bad bank" plan to purchase toxic assets from struggling lenders, despite avoiding such a solution so far, accountancy firm PricewaterhouseCoopers said Wednesday.

    A government "bad bank" should be set up quickly and be focused on the largest institutions, the firm explained, noting that Germany, Switzerland and Ireland have already taken this approach.

    "The crisis is about to enter a new phase where efforts to remove troubled assets from bank balance sheets must be accelerated," PWC said. "U.S. government interventions to date have stabilized individual institutions, but have not created a functioning market and pricing mechanism and therefore have had little impact on reviving the broader markets."

    Some government initiatives have had the opposite effect, the firm added.