Government "Bad Bank" Plan May Slow Mortgage Relief

The federal government has been considering creating a new bank to buy all the high risk loans held by private banks.  This new bank has been nicknamed the "bad bank" because it would hold only high risk loans.

The "bad bank" plan is the subject of an article by Greg Burns in today's Chicago Tribune (the link to the article is below).

In addition to the risks to taxpayers discussed in Greg Burns' article, there is another potential problem.  That is banks that are currently negotiating with their borrowers on modify their loans may decide to wait to see if the Federal Government does in fact create a "bad bank"   Waiting may not be could for borrowers who every day get further behind on their payments

http://www.chicagotribune.com/business/columnists/chi-thu-bad-bank-burns-jan29,0,5378928.column