Sweden's Bank Bailout

There was a banking crisis in Sweden during the 90's which has many parallels to the current crisis, even if not nearly the same in size.
In the Swedish crisis there was a great amount of assets being described as 'toxic,' much like the assets that banks around the world are holding today. In both situations, the response was to guarantee banks and to make liquidity a priority.
The difference was that the swedish created 'bad banks' to take ownership of non-performing assets and then manages them to restore their value. This idea had begun early during the US crisis under Indymac, with the focus being on mortgage loans - where most of the distressed loans are. But this idea goes beyond restructuring loans while they are still a part of these companies, it involves separating them so that the original bank can start to function again. The loans were then dealt with by that separate company
Complexity is a bigger issue with the current crisis, and so is pricing the assets. In the swedish situation both banks, good and bad, were owned by the state. The US government has taken an investment in some of the banks, but does own or run any.
The article is in favor of doing more to separate out the bad assets, which the treasury supposedly is trying to do, but while in sweden private investment lagged for several years, they believe the current US crisis is trying to make the capacity for new private investment a focus.