The Legacy Loans Program to Buy Bank’s Bad Loans May Be Put on Hold

A U.S. government program designed to rid banks of bad loans is stalling and may soon be put on hold, the WSJ reported on Wednesday, citing people familiar with the matter.

The Legacy Loans Program, which is being crafted by the Federal Deposit Insurance Corp [FDIC], is part of the $1 trillion Public Private Investment Program the federal regulators announced in March as a way to encourage banks to sell securities and loans weighing on their balance sheets to willing investors.

Prospective buyers and sellers have become increasingly hesitant and have expressed reluctance to the FDIC about participating for fear the program’s rules will change in a political atmosphere hostile to Wall Street, the Journal reported. In addition, some banks that might have sold troubled loans into the program earlier in the year have become less eager as they regained a sense of stability, the paper said.

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