One Idea for Bank Crisis: Quarantine the Bad Assets

U.S. Officials Look To Solution Used By Sweden in '91

By Binyamin Appelbaum and David Cho
Washington Post Staff Writers
Sunday, January 18, 2009; A25

A housing bubble bursting, banks faltering toward failure, a nation plunging into recession.

The year was 1991, and the Swedish government responded with a dramatic plan: Unpaid loans and other troubled assets would be dumped into new state-owned banks, scrubbing the banking industry of problems in the hope of sparking a lending revival.