bad bank

Possibly derived from a usage by Walter Bagehot in Lombard Street: "The cardinal maxim is, that any aid to a present bad bank is the surest mode of preventing the establishment of a future good bank."

bad bank (plural bad banks)

1. (banking) A bank created to specialize in the ownership of defaulted loans and their collection.
   • 1992, Business Week:

     And Grant Street National Bank, as the bad bank is called, ... The bad bank and its 75 workout specialists proved adept at unloading sorry loans

   • 1999, Benton E. Gup, International banking crises, page 249:

     In the 1980s, another method of problem resolution emerged, known as a good-bank, bad-bank split model.

• collection bank

• toxic assets
• bad bank on Wikipedia.Wikipedia