Bad Investments

WASHINGTON — The big banks got through the government’s "stress tests” with only minor bruising. But a bigger test awaits them: Getting rid of the bad assets that helped ignite the financial crisis in the first place.

It won’t be easy. A Treasury program announced three months ago to help private investors buy up those assets hasn’t even begun. Some banks are threatening not to participate. They fear they won’t fetch a high enough price for their soured mortgage-related debt, which was bought at the height of the housing boom. Removing the bad assets is needed to fix the banks and help revive the economy. Unless they can sell off these assets, banks won’t be able to resume normal lending and rebuild confidence in the financial system, even if they have enough money to survive.


by the associated press