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By Susan Cornwell
WASHINGTON Jan 27 U.S. Senate Banking
Committee Chairman Chris Dodd said on Tuesday he was aware the
Obama administration was discussing the idea of establishing a
"bad bank" to mop up toxic assets of struggling U.S. banks, and
the idea made some sense.
"I'm aware they're discussing it," Dodd, a Connecticut
Democrat, told reporters outside the Senate. "I think that
idea has arrived. It makes some sense to me."
Numerous U.S. lawmakers expect the Obama administration to
soon produce a new strategy for stabilizing the nation's
troubled banks, and believe several options are under
Dodd's committee would presumably be consulted if the
administration were going to try and establish an aggregator
bank, or "bad bank," to take troubled assets off banks' balance
sheets, although Dodd said administration officials had not
talked personally to him about it. "There's talk about it but
not to me specifically."
Although the idea had "real appeal," part of the challenge
was determining just how to implement it, he said. The amount
of troubled bank assets were "growing every day ... How much
bad assets are we talking about, and at what cost?"
Another option would be for the Obama administration to
request more bank bailout funds in addition to the $700 billion
that has already been approved in recent months.
Dodd said he did not know whether the administration would
seek more funds for banks, but he warned that if they do, they
should first explain how they spent the money already in the
bank rescue fund.
"My only advice would be tell us how you're going to spend
the $350 (billion) we just got you," he said, referring to the
second tranche of the money allocated to the Troubled Asset
Relief Program. Then, "you can maybe make the case" for more
"The public's patience is running thin on this issue," Dodd
warned. It would be "awfully difficult" for the administration
to ask for more money now "in the absence of demonstrating how
well we can manage the money we've got," Dodd said.
Among other things, Dodd said he wants to see the
administration use some of the existing TARP funds for
mitigation of home foreclosures.