Bad Bank

Filed Under » ,
Dictionary Says

Definition of 'Bad Bank'

A bank set up to buy the bad loans of a bank with significant nonperforming assets at market price. By transferring the bad assets of an institution to the bad bank, the banks clear their balance sheet of toxic assets but would be forced to take write downs. Shareholders and bondholders stand to lose money from this solution (but not depositors). Banks that become insolvent as a result of the process can be recapitalized, nationalized or liquidated.
Investopedia Says

Investopedia explains 'Bad Bank'

A well-known example of a bad bank was Grant Street National Bank, which was created in 1988 to house the bad assets of Mellon Bank. The financial crisis of 2008 revived interest in the bad bank solution, as managers at some of the world's largest institutions contemplated segregating their nonperforming assets into bad banks.

Federal Reserve Bank Chairman Ben Bernanke proposed the idea of using a government-run bad bank in the recession following the subprime mortgage meltdown in order to clean up private banks with high levels of problematic assets and allow them to start lending again. An alternate strategy considered was a guaranteed insurance plan that would keep the toxic assets on the banks' books but eliminate the banks' risk and pass the risk on to taxpayers.
Search results for

'Bad Bank'

  • Bank Regulations: Good Or Bad? - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0310/Bank-Regulations-Good-Or-Bad.aspx
    ... Bank Regulations: Good Or Bad? Posted: March 11, 2010 6:53AM by Eric Fontinelle. ...

  • Obtaining Credit In A Bad Economy Slideshow | Investopedia

    http://www.investopedia.com/slide-show/credit-in-a-recession
    ... Obtaining Credit In A Bad Economy. ... If a bank think it's too risky to provide you
    with a loan, then it is probably not a good idea for you to get one. ...

  • UBS Sees Light At The End Of The Tunnel

    http://stocks.investopedia.com/stock-analysis/2009/UBS-Sees-Light-At-The-End-Of-The-Tunnel-UBS0216.aspx
    ... the others, but the original TARP idea, that of soaking up the billions in bad loans
    by the Treasury, has not yet proceeded to the "bad bank" stage, unlike the ...

  • When Wholesale Funding Goes Bad

    http://www.investopedia.com/articles/economics/09/when-wholesale-funding-goes-bad.asp
    ... When the yield curve is upward sloping, bank and commercial finance profitability
    is good. ... of wholesale funding in and of itself is not necessarily a bad thing ...

  • How To Get A Credit Card Despite Bad Credit - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0112/How-To-Get-A-Credit-Card-Despite-Bad-Credit.aspx
    ... so if it isn't paid, the bank will cease the deposit to pay off the bill. What makes
    secured cards the smartest way to get a credit card with bad credit is ...

  • Obtaining Credit In A Bad Economy Slideshow | Investopedia

    http://www.investopedia.com/slide-show/credit-in-a-recession/loan-process-collateral.aspx
    ... Obtaining Credit In A Bad Economy. ... If a bank think it's too risky to provide you
    with a loan, then it is probably not a good idea for you to get one. ...

  • Obtaining Credit In A Bad Economy Slideshow | Investopedia

    http://www.investopedia.com/slide-show/credit-in-a-recession/become-attractive-borrower.aspx
    ... Obtaining Credit In A Bad Economy. ... If a bank think it's too risky to provide you
    with a loan, then it is probably not a good idea for you to get one. ...

  • Obtaining Credit In A Bad Economy Slideshow | Investopedia

    http://www.investopedia.com/slide-show/credit-in-a-recession/understand-lender-term-consolidation.aspx
    ... Obtaining Credit In A Bad Economy. ... If a bank think it's too risky to provide you
    with a loan, then it is probably not a good idea for you to get one. ...

  • 8 Good Intentions With Bad Outcomes

    http://www.investopedia.com/articles/financial-theory/12/good-intentions-bad-outcomes.asp
    ... Financial Theory, Investment. In a world plagued by scandals and bad intentions,
    it ... Growth by Acquisition Bank of America built an empire one acquisition at a ...

  • When Good People Write Bad Checks

    http://www.investopedia.com/articles/pf/08/overdraft-protection.asp
    ... The bad side to ad-hoc is that the fees can sometimes be a lot compared to the amount
    by which you overdraw. (Check out our article The Ins And Outs Of Bank ...

Related Articles

Bank Rates
Product Today Last Wk
$10K MMA 0.50% 0.51%
MMA 0.45% 0.46%
6 Month CD 0.46% 0.47%
1 Year CD 0.70% 0.75%
5 Year CD 1.46% 1.46%
1 Year Jumbo CD 0.66% 0.67%
Rate data provided by Bankrate
Product Today Last Wk
$30K HELOC 4.59% 4.60%
$30K Home Equity Loan 5.74% 5.77%
$50K Home Equity Loan 5.45% 5.50%
$50K HELOC 4.24% 4.24%
$100K Home Equity Loan 5.41% 5.46%
$100K HELOC 4.13% 4.13%
Rate data provided by Bankrate
Product Today Last Wk
30 Year Fixed 3.80% 3.80%
15 Year Fixed 3.09% 3.11%
1 Year ARM 3.54% 3.53%
30 Year Fixed Jumbo 4.38% 4.38%
5/1 ARM 2.65% 2.69%
3/1 ARM 2.69% 2.69%
Rate data provided by Bankrate
Product Today Last Wk
60 Month Used Car Loan 4.51% 4.51%
48 Month Used Car Loan 4.35% 4.35%
48 Month New Car Loan 3.24% 3.24%
36 Month Used Car Loan 4.34% 4.36%
36 Month New Car Loan 3.11% 3.13%
60 Month New Car Loan 3.35% 3.34%
Rate data provided by Bankrate
Partner Links