ECB Wants "Bad Bank" Too
It seems that we are not the only one contemplating insanity. The European Central Bank seems to be infected with the same poor judgement as the Federal Reserve.
ECB Drawing Up 'Bad Bank' Guidelines
DAVOS, Switzerland -- The European Central Bank is drawing up guidelines for European governments that are considering so-called "bad banks" to house banks' toxic assets. The ECB is also working on guidelines for European governments that plan to guarantee toxic assets remaining on banks' books, another form of bank bailout.
Why would the European Union citizens want to be using their tax dollars to guarantee "toxic" assets. Doesn't this just sound stupid? They don't need a "Bad Bank" and neither do we. Even talking about implementing such a think is a waste of time and money. Actually implementing it will just squander billions (and potentially trillions) in taxpayer money.
German Finance Minister Peer Steinbrueck told a German daily newspaper Thursday the government would not set up a centralized bad bank, but indicated the government is considering the idea that banks could set up their own individual entities to house toxic assets.
Such banks, Mr. Steinbrueck told the daily Berliner Zeitung, could then use part of the German government's EUR 500 billion banking-sector rescue plan to shore up their remaining sound business.
Sounds to me like Europe could benefit from instituting a 100% reserve policy for its banks too. How come no one realizes that this is the main root of the entire problem. All of the other solutions are just patches that will result in the same problems down the road as we have already seen!
Regarding Mr. Steinbrueck's statement, I would say that there are probably not to many pieces that "remain sound" in these businesses. Most of them are probably insolvent and were involved in insane lending practices. These businesses need to fail and let others replace them.
Europe, America, and the rest of the world needs to stop the banking ponzi scheme and return to sound banking. Until then, everything else is just patching the dam.