The emperor was already naked - now they sell the puplic the bad idea a second time

The Obama administration is not any better than the prior ones - how could they - the same people taking over again. One has to say that the disaster started already under Clinton with Greenspan,Rubin and Summers and the Bush stuff just finished the mission.
Its outrages that they come up now with the idea to create a 'Bad Bank' to buy toxic assets - that is exactly what TARP was created for and never turned out to be used for that. Now they come up with another 1.2 tril needed for banks - well in my calculations 4 months ago I was coming up with close to 10 tril with momentum marching. The whole TARP fund of 700 bil would just cover the Citi losses of that days. In any case the printing press of always in a good mood Bernanke work 24/7 but at some point the government guarantees will not be worth a lot anymore and the Bond bubble will burst - rather in a year from here.

U.S. ‘Bad Bank’ Plan Gets Momentum to Revive Lending (Update2)

By Robert Schmidt and Craig Torres

Jan. 16 (Bloomberg) -- Renewed questions about U.S. banks’ viability are pushing regulators toward a new plan that would remove toxic assets from bank balance sheets, in what may become the biggest effort yet to unfreeze lending.

President-elect Barack Obama’s advisers see an increasingly grave banking crisis and are considering proposals far more sweeping than any steps that have been taken so far, according to people who’ve discussed the outlook with them.

“They need to do something dramatic,” said Harvard University Professor Kenneth Rogoff, a former chief economist at the International Monetary Fund, and member of the Group of Thirty counselors on financial matters, a panel that includes Treasury Secretary-designate Timothy Geithner and Lawrence Summers, incoming director of the National Economic Council.

Federal Reserve officials are focusing on the option of setting up a so-called bad bank that would acquire hundreds of billions of dollars of troubled securities now held by lenders. That may allow banks to reduce write-offs, free up capital and begin to increase lending. Paul Miller, a bank analyst at Friedman Billings Ramsey & Co. in Arlington, Virginia, estimates that financial institutions need as much as $1.2 trillion in new aid.

Other steps that may be under consideration include providing further guarantees for toxic assets that remain on the banks’ books, as officials did for Citigroup Inc. in November and with a $118 billion backstop for Bank of America Corp. today, or purchasing selected investments. Federal Deposit Insurance Corp. Chairman Sheila Bair yesterday played down the alternative of nationalizing lenders.