If necessary, they may create a special fund to manage and wind down troubled assets.
The troubled assets reportedly will be priced via an auction mechanism, according to reports.
When troubled assets are dumped, or when defaults occur during weak market conditions, the trough is deepened.
Nippon Credit Bank has tied up with Bankers Trust to securitize troubled assets and help handle foreign operations.
The language in the Troubled Assets Relief Program, or TARP, gives the SEC the authority to suspend the rule.
On the portfolio side, establish a price, or at least a floor on the price, of the troubled assets.
Through the program, companies would also have the ability to purchase insurance on troubled assets, rather than selling them.
Banks remain in potential trouble, still saddled with troubled assets, their stocks plunged back to their levels of 2008.
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In the meanwhile, troubled assets might only mean something to investors depending on the name of the bank holding the assets.
Kramer gave high scores to JPMorgan for marking down its troubled assets right away and having good risk management and leadership.
What's missing in the latest plan, however, is any mention of how troubled assets will be marked on bank balance sheets.
Many important details of the program--including which banks will be the first to sell their troubled assets to Uncle Sam--are still unknown.
How can you stress-test banks if you do not know how their troubled assets will be dealt with and at what price?
Battipaglia also anticipates roughly a five-year workout program for the troubled assets.
That still leaves banks with the problem of financing their more troubled assets, an issue the Bush administration's plan was designed to solve.
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Banks, facing capital constraints and forced to de-leverage their own holdings of troubled assets, are not lending more to each other or to customers.
"One continuing uncertainty is whether the troubled assets that remain on bank balance sheets can again become the trigger for instability, " the report says.
In recent weeks, talk of a government-created "bad bank" to absorb troubled assets resurfaced as a solution, as did a government insurance program to guarantee assets.
Treasury and Federal Reserve officials have waffled between wanting to use the TARP to buy troubled assets and using it to make direct preferred equity investments.
One reason the bank bailout quickly morphed into a capital-injection program was that nobody at Treasury could figure out how to put a price on those troubled assets.
The actions taken by the Treasury Tuesday fall under the rubric of the Troubled Assets Relief Program that is the centerpiece of the bailout bill Congress passed earlier this month.
Perhaps the biggest driver of the Tea Party movement was not the health care debate, but the bailout of Wall Street and the creation of the Troubled Assets Relief Program.
"I am optimistic about TARP because it allows troubled assets to remain on balance sheets until they mature many years in the future, " says John Osbon, founder of Osbon Capital Management.
It proposed the original plan to purchase troubled assets, but then concluded that it wouldn't work and switched to direct investment, but passive only--and then Obama took over and started nationalizing firms.
The central government, in response to the 1990s crisis, took bad loans off the books of the four largest banks by having newly formed asset management companies buy troubled assets at above-market values.
Schumer proposed the return of an idea from the Depression: a Reconstruction Finance Corp. that would inject capital into banks through stock purchases, leaving it to the banks to dispose of troubled assets.
On the grading scale, BofA did slightly better, with Kramer noting the bank is in a "difficult situation" with troubled assets in collateralized debt obligations (CDOs) and some real estate from Merrill Lynch.
Market participants are worried that a Congressional drama would lead to a big sell off on par with what occurred in October 2008 when Congress rejected the Troubled Assets Relief Program under George W. Bush.
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The federal government stepped in Sunday night to bail out Citigroup and restore confidence in the financial system, promising to protect the banking giant against losses on hundreds of billions of dollars worth of troubled assets.
The financial institutions with assets that they could not price can now maintain that the mere existence of the Troubled Assets Relief Program (TARP) means that there is a potential market for the securities that they could not sell previously.
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