Criticism
Critics of bad banks argue that the prospect that the state will take over non-performing loans encourages banks to take undue risks, which they otherwise would not. Another criticism is that the option of handing the loan over to the bad bank becomes essentially a subsidy on corporate bankruptcy. Instead of developing a company that is temporarily unable to pay, the bondholder is given an incentive to sue for bankruptcy immediately, which makes it eligible for sale to a bad bank. Thus, it can become a subsidy for banks on the expense of small businesses.
Read more about this topic: Bad Bank
Famous quotes containing the word criticism:
“However intense my experience, I am conscious of the presence and criticism of a part of me, which, as it were, is not a part of me, but a spectator, sharing no experience, but taking note of it, and that is no more I than it is you. When the play, it may be the tragedy, of life is over, the spectator goes his way. It was a kind of fiction, a work of the imagination only, so far as he was concerned.”
—Henry David Thoreau (1817–1862)
“...I wasn’t at all prepared for the avalanche of criticism that overwhelmed me. You would have thought I had murdered someone, and perhaps I had, but only to give her successor a chance to live. It was a very sad business indeed to be made to feel that my success depended solely, or at least in large part, on a head of hair.”
—Mary Pickford (1893–1979)
“As far as criticism is concerned, we don’t resent that unless it is absolutely biased, as it is in most cases.”
—John Vorster (1915–1983)