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Over the last several days, the incoming administration has moved toward the idea of creating one federal agency which would have the purpose of taking most of the toxic assets off bank balance sheets. Since the figure at Citi is probably at least as large as the $300 billion pool...

Author: /time Magazine | Title: Building A $1 Trillion "Bad Bank" | 1/17/2009 | See Source »

The sponging up of all these toxic assets takes the discussion back around to what the government gets in return for such colossal aid. The largest American banks had market capitalizations of as much as $300 billion each two years ago. The purchase of bad assets when stock values were...

Author: /time Magazine | Title: Building A $1 Trillion "Bad Bank" | 1/17/2009 | See Source »

Those market cap figures are now closer to $40 billion for each of the four largest banks. A one trillion assistance package has to create some value for taxpayers. A stake in the banks would seem to be the only options whether it is through senior debt or equity.

Author: /time Magazine | Title: Building A $1 Trillion "Bad Bank" | 1/17/2009 | See Source »

Whatever the solution, the needle come back around to pointing to the a nationalization of the American banking system. There is too little equity left in the banks for them to trade for government assistance.

Author: /time Magazine | Title: Building A $1 Trillion "Bad Bank" | 1/17/2009 | See Source »

That's a typically Johnsonian exaggeration. The Prime Minister has gained international kudos from his quick action to recapitalize British banks, which was copied around the world. But Labour is trailing the Conservatives in the polls and opposition to the third runway may further undermine support for the government. For...

Author: /time Magazine | Title: Heathrow's Expansion: A New Kind of Blitz in England | 1/17/2009 | See Source »

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