What Is A BAD Bank?

April 21-2009:

What Is A Bad Bank?


The new definition of a Bad Bank are the following:

Those banks that have lost millions or billions on TOXIC loans or Investments, can have these loans shuntered off into a Bad Bank or (Toxic Loans Clearing House), which will buy those toxic loans at current price.  

Most of which will be very much lower in value, from the time they were sold or given.

So the Banks that held these TOXIC loans will now be FREE to get New Capital from the State's Treasury (on Loan), to start lending once again, and providing loans to it's customers.

In time, when the economy recovers, those TOXIC loans at the Bad Banks or (TOXIC Loans Clearing House), will SELL those loans on the open market for less that they cost at the outset.

Some of these will accrue Profit from those sales.

Other sales will incur a Loss too.

From the new TOXIC sales that have accrued profit, the bank will pay this money back to the banks it came from, for them to eventually repay the State, for the loans they got for those TOXIC acommodations.

Derryck.
NYC.