Speculation that the Obama administration could announce fresh plans to clean up US banks within days of taking office next week grew on the weekend after a top regulator called for a special bank to be set up to unblock the system. Sheila Bair, the head of the Federal Deposit Insurance Corporation, called for the creation of an “aggregator bank” to buy the toxic assets now hampering bank balance sheets and making it difficult for them to raise capital or expand lending. Hank Paulson, outgoing Treasury secretary, offered support for such a move, saying much work has been done on an aggregator bank” and other ways of “dealing with illiquid assets”. Since the start of the credit crisis, banks have been stuck with massive amounts of assets for which there are few buyers and only firesale prices.

This entry was posted by Gwen Robinson on Monday, January 19th, 2009 at 5:52 and is filed under Capital markets, People. Edit this entry.