Which of the Following Is NOT a Reason for Using

question 27

Multiple Choice

Which of the following is NOT a reason for using a bad bank as a vehicle to add value in the loan sale process?

• A)Contracts for managers can be created to maximize the incentives to generate enhanced values from loan sales.
• B)The bad bank enables bad assets to be managed by loan workout specialists.
• C)The bad bank does not need to be concerned about liquidity needs since it does not have any deposits.
• D)Moving the bad loans off the balance sheet of the good bank will improve the markets perception, and thus performance, of the good bank.
• E)The good bank-bad bank structure increases information asymmetries regarding the value of the good bank's assets.