By Kunal Khann
Published: January 30, 2009
In what can only be described as an episode of Orwellian modus operandi, the “Bad Bank” plan will save, not exterminate, flailing banks.
The financial chicanery works like so: The Treasury will form a holding company that will purchase troubled assets from banks. These include a variety of securities, from those linked simply to residential mortgages, to complex derivatives conjured by the minds of financial Frankensteins.
Banks will supposedly benefit from all this by having their balance sheets purged of nasty and unwanted assets. With their balance sheets freed up, banks can go back to making loans to consumers and facilitating the flow of money in the economy. Birds will sing, rainbows will spontaneously appear in the sky and Ben Bernanke will shave his beard. Or so the story goes… --NewsHammer 2/02/2009
Continue reading the Jan 30, 2009 article from Stanford University's The Stanford Daily.
