FDIC's toxic asset plan may be dead

The FDIC's plan to help banks rid their balance sheets of toxic mortgage assets was put on life support -- and may now be dead. Many banks have refused to accept their losses and sell their loans, even though the government was prepared to prop up prices by offering cheap financing to investors. The banks refused the bargain and kept their prices higher than investors wanted to pay.

In acknowledging failure of the Legacy Loan Program, Sheila Bair, chairwoman of the FDIC, told The New York Times, "Banks have been able to raise capital without having to sell bad assets through the LLP, which reflects renewed investor confidence in our banking system."