The Federal Deposit Insurance Corp. may manage the so-called bad bank the Obama administration is likely to establish,
reports, citing people familiar with the matter.
FDIC Chairman Sheila Bair is pushing to run the operation, which would buy the toxic assets that are clogging the balance sheets of banks.
reports Bair is arguing that her agency has expertise and could help finance the effort by issuing bonds guaranteed by the FDIC.
President Obama's team could announce the outlines of its financial-rescue plan as early as next week, an administration official said, according to
The bad-bank initiative may allow the government to rewrite some of the mortgages that underpin the bad debt of many banks,
reports. Some lenders may be taken over by regulators as the government seeks to provide a shield to taxpayers.
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,
"I'm aware they're discussing it," said Dodd, a Connecticut Democrat. "I think that idea has arrived. It makes some sense to me."
reports Dodd's committee would presumably be consulted if the administration was going to try and establish an aggregator bank, or "bad bank," although Dodd said administration officials hadn't talked personally to him about it.
This article was written by a staff member of TheStreet.com.