Soros warns against "bad bank" option: report

[Joanne98]

Source: Reuters


(Reuters) - Setting up a 'bad bank' to absorb toxic assets of troubled U.S. lenders -- a move the Obama administration is debating -- would be an error on political and financial grounds, billionaire financier George Soros said.

The process would lead to difficulties in valuing toxic securities and generate covert subsidies for affected banks, generating "tremendous political resistance to any further (bailout)," Soros wrote in a commentary in the Wall Street Journal on Wednesday.

The U.S. administration is thought to be considering creating a government entity to take toxic assets off banks' balance sheets as part of a $900 billion stimulus package President Barack Obama hopes to see passed by mid-February.

European leaders are reviewing similar options -- already under discussion by the German, British and Dutch governments -- and will take their proposals to April's G20 meeting, European Union economic chief Joaquin Almunia said on Monday.



Read more: http://www.reuters.com/article/ousiv/idUSTRE5132DN20090204

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What he's really talking about is putting the bad derivatives somewhere to sort them out. There's no way anybody can pay off 600 trillion dollars. The EU is doing the same thing but at least they call it a "derivative clearing house". Here it's the vague term "bad bank". They should just call it what it is.

This problem isn't going away. Nobody's talking about making the D bomb illegal. We need to shine a light on the "dark markets", we need to put people in jail. We need a real media that explains it.

I have no hope for this process. They can't stop the deceptiveness. I'm still predicting global riots for this summer. Nobody's in the mood for this crap.

[TomClash]

1. Soros is late to the party

The bad bank option has sailed - it's not happening. Period. And you can take that to the Good Bank.

I have my option - everybody pays - everyone loses - on every side of every deal - if you shorted you lose - if you covered you lose - if you hedged you lose - if you did nothing you lose - if you're a counterparty you lose and so on. It's like insurance in that the losses are absorbed by everyone, but its stings enough to discourage anyone from playing this game in the near future.

The alternative is to let the whole system collapse and simply start over again. I predict that will lead to fascism and/or a series of global wars.

[Skink]

2. I like how Soros always warns first before pillaging.