China to take bank equity stakes in exchange for bad loans
A story that didn't get much attention today was a Reuters report that the central bank is preparing regulations that will allow lenders to give the PBOC the bad loans in exchange for ownership stakes.
Official data shows banks hold $614 billion in non-performing loans but most believe the situation is worse. Still, even if all the reported bad loans were transferred to the government, this program would be nearly as large as the original US TARP program.
It's also a signal that China is willing to pull out all the stops to rekindle growth.
