Federal Government May Create 'Bad Bank' as Part of Bailout

Check this out from Reuters:

The Obama administration is working on a plan to help stabilize the U.S. banking industry.

According to a source familiar with the government's thinking, it will include creating a "bad bank" to soak up distressed assets hurting banks' balance sheets, offering federal insurance for other problem assets, and injecting taxpayer dollars into banks in exchange for common stock.

According to Sen. Charles Schumer (D-NY), some experts think creating a "bad bank" to buy toxic assets could require as much as $4 trillion.

Say what you will about the Bush administration, but at least they could name things - ("Clear Skies Initiative!", "No Child Left Behind!", etc.)

"Bad bank"? That's supposed to inspire confidence? The Bush White House would've used the phrase "Magical Money Reallocation Puppydog Farm" or something.

We'd still be in an awful financial mess but, hey, puppydogs.