The multi-billion dollar bank bailout last fall supposedly would allow recapitalization by getting rid of toxic debt that was sinking banks forced by law to "mark to market" their non-performing loans--that is, show them on their books at their currently distressed valuations. Unfortunately, the mark-to-market rule still applies and is still causing havoc.
There have been proposals lately for a giant "bad" bank to assign all the bad loans, with government support, freeing the currently burdened institutions to go about their business. The "bad bank" idea apparently worked in Scandanavia.
Brian Westbury and Robert Stein have another idea, and it's interesting and hopeful. It would a huge feather in the new Administration's cap if Mr. Obama were to follow their advice.
