Corker Suggests Good Bank/Bad Bank May Be Solution

Tennessee Senator Bob Corker says it’s time for the government to take a tougher approach with some of the nation’s biggest banks.

Some banks are holding on to their bailout money rather than using it to make loans. Corker says that’s because the banks know there are more problems that haven’t surfaced.

He suggests one solution would be to split each of those banks into two entities. The so-called “good bank” would keep the healthy credit, which Corker says would allow them to play a vibrant and productive role in the economy. That would concentrate the bad credit into a separate “bad bank.” Corker says the government would have to deal with those with in a hands-on and possibly costly way.

“Maybe taxpayers insure a portion of the bad bank. You know, that’s painful for taxpayers, but maybe that’s a way to deal with it. There’s numbers of alternatives.”

Corker contends the current approach of buying stock in banks to help shore them up is not focused enough to keep troubled institutions from becoming insolvent.