Bad banks

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A bad bank is a bank that holds bad, or 'toxic' assets, allowing some other bank to get rid of these assets and thereby become a 'good bank.'[1]

"How does a bad bank solve this problem? There are two basic models: one in which each sick bank splits into a good bank and a bad bank, the other in which the government creates one big bad bank and multiple sick banks unload their toxic assets onto it."[1]


Also see


  1. 1.0 1.1 "Bad Banks" for Beginners, The Baseline Scenario, January 21, 2009.

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