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January 28, 2009

Do the feds have the power to mop up toxic assets using taxpayers and the dollar?


"The Federal Deposit Insurance Corp is aiming to take control of a widely mooted 'bad bank,' to be set up by the U.S. government to mop up toxic assets of struggling banks, Bloomberg News reported on Tuesday.

Numerous U.S. lawmakers expect the Obama administration to produce a new strategy soon for stabilizing the nation's troubled banks, and believe several options are under discussion.

CNBC reported that the Obama administration is set to announce the outlines of its financial rescue plan early next week.

FDIC Chairman Sheila Bair would run the operation, Bloomberg said, citing a source familiar with the matter. It said another source told the news agency that Bair is arguing that her agency could help finance the effort by issuing bonds guaranteed by the FDIC.

U.S. Senate Banking Committee Chairman Chris Dodd said on Tuesday he was aware the Obama administration was discussing the idea of establishing a 'bad bank' to mop up toxic assets, and added the idea made some sense."

*This information is solely an excerpt of a third-party publication and is incomplete. Please subscribe to the referenced publication for the full article. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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