Word: bankses
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For all the bailout money they've received, some of America's biggest banks are still unwilling to sell many of the toxic assets clogging their balance sheets. The prices being offered, they say, are simply too low, and neither massive government subsidies for buyers nor encouragement from President Obama...
This tension over pricing helps explain the leaked stories on Wednesday announcing that Treasury Secretary Timothy Geithner will make public the results of the banks' "stress tests" next month. The tests started out in March as a gauge of banks' ability to handle a worst-case economic downturn; now they...
The banks' resistance may be the biggest hurdle Geithner faces in his plans to rebuild the financial sector. At the height of the crisis over the winter, there were neither buyers nor sellers for the toxic assets. Saddled with the assets on their balance sheets, the banks sharply curtailed lending...
At that point, pressure mounted from regulators, the Federal Reserve and Congress on the Financial Accounting Standards Board to loosen accounting rules so that the toxic assets' book value could be marked up to buttress the banks' balance sheets - conveniently raising the assets' potential sales price at the same time...
But even with the accounting fix and the massive offer of government leverage to buyers, bankers are turning up their noses at the markdowns they will have to take on assets that once represented a large percentage of their equity. "You're not going to sell if you believe the...