Obama's Toxic Asset Plan in Doubt

One of the president’s big financial rescue plans looks like it may never come to fruition. The controversial toxic asset clean-up plan, the Financial Times reports, is being sunk by doubts from potential investors and regulators, as well as waning interest from the banks themselves. The proposal was supposed to clear bad loans from the banks’ books and help them to ease lending and raise capital, but investors are worried about congressional-mandated pay caps, and regulators are beginning to think the plan might not be necessary, after all. Just last week the FDIC postponed plans for a pilot sale, saying, “The timing just is not right.” But the International Monetary Fund is afraid that if the banks—especially smaller regional institutions—don’t get rid of their bad assets, they will have trouble lending.