January 30, 2009 / 7:06 PM / 9 years ago

"Bad bank" may be put on hold: report

WASHINGTON (Reuters) - Policy-makers have yet to reach a consensus on how a U.S. government-run bad bank would work and the idea may not move forward, CNBC television reported on Friday, citing unnamed sources.

“The government-run bad bank idea that was being floated ... apparently has hit a snag, it might not happen,” a CNBC anchor said recapping an earlier report. “Charlie (Gasparino) says the government has no consensus right now on how the bad bank would work, the issue is pricing.”

“Making that thing work right now from what I understand is proving to be very difficult,” CNBC’s Gasparino said in his report.

Gasparino said the Treasury Department has been talking with the chief executives at the biggest Wall Street banks on how to proceed and may shelve the idea of an aggregator bank and instead provide across-the-board guarantees for the troubled assets clogging up banks’ balance sheets.

“The aggregator bank is been put on hold indefinitely,” he said. “They may do a hybrid: aggregator bank-guarantees. This thing right now has hit a major snag.”

Another issue plaguing the proceeding on how to purchase the assets from the banks is the lack of senior staffing under Treasury Secretary Timothy Geithner

Geithner was meeting on Friday with Federal Reserve Chairman Ben Bernanke, Federal Deposit Insurance Corp Chairman Sheila Bair and Comptroller of the Currency John Dugan, with the Treasury saying it was “to discuss financial and regulatory reform.”

Reporting by Tim Ahmann and John Poirier; Editing by Chizu Nomiyama

Our Standards:The Thomson Reuters Trust Principles.
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