FED to think of Forming a Bad Bank

It seems that the FED is trying to pull out all the stops to get credit moving again. This one sounds nuts but it just might work.

Today�s remarks come days before President-elect Barack Obama takes office, and signal a readiness among regulators to undertake what�s likely to be the most radical effort yet to unfreeze lending. Fed Chairman Ben S. Bernanke earlier this week urged a �comprehensive plan� to address illiquid assets, floating the idea of a �bad bank.�

I guess this bad bank would be one massive ball of crappy assets that the good banks have shed from their balance sheets. It sounds like the financial version of Anti-virus quarantine. It sounds like an interesting idea as long as the government doesn't lose a chunk of money trying to hold onto these things.