Key facts about USA Bad Bank

Who will run Bad Bank?

FDIC Chairman Sheila Bair would run the operation, Bloomberg said, citing a source familiar with the matter. It said another source told the news agency that Bair is arguing that her agency could help finance the effort by issuing bonds guaranteed by the FDIC.

Who will create the Bad Bank?

The Federal Deposit Insurance Corp is aiming to take control of a widely mooted 'bad bank', to be set up by the U.S. government to mop up toxic assets of struggling banks, Bloomberg News reported on Tuesday.

How the Funding for Bad Bank will be arranged?
It remains to be seen how the "bad bank" will be funded, given the original $700bn (£493bn) bail-out fund has just $350bn remaining, up to $100bn of which is to be allocated towards the housing crisis, with the need to return to the US Congress for extra funding a likely possibility.

Why does the Administration need to be fair?

This is a one-off, emergency measure. The fact that it is worrying about other banks demanding the same deal suggests the terms are not sufficiently punitive to Citi management (note the stress on the impact on the key actors). But even if it is not as nasty as it ought to be to Citi, people in power have the right to be capricious. Citi is unique on so many dimensions that it is easy to argue that a deal for Citi need not apply to anyone else.