What are toxic assets?

Toxic assets are assets for which they are not buyers, and as a result no clear value. Mortgages supported by securities and loans on subprime are two frequently cited examples of toxic assets. In the global economic crisis at the beginning of 2000, toxic assets have become a problem for the main concern, especially in the United States, where such assets caused a radical free fall in the US economy, even though the financial industry tried. The problem is that if the bank acquires a large number of toxic assets, these assets will raise the value of the book's books, but do not contribute to the financial situation of the bank's financial situation. In Other Words, the Bank Has and Lot of Money on Paper, But It Can't Actual Sell Its Toxic Assets, And AS and Result It Has Minimum Liquidity. Banks with a more conservative attitude often try to avoid getting toxic assets, but it can be difficult, pokUDs are associated with investment in lower risk and are sold as a package. This was the case with many securities supported by mortgages that forced banks to buy a mixed mixture of assets.

If the bank overloads with a toxic asset, it may not be able to respond to market changes or serve its customers. This can create concerns among customers of the bank who can panic in response to the bank's instability and make the bank more unstable in this process. In these cases, the best step of the bank is to try to get rid of toxic assets, but it can have it difficult because it is because of the inability to find the buyer.

Some investors can voluntarily participate in toxic assets for a fraction of their nominal value, negotiations, that the assets will become a dealer in the future, but banks often relieve such agreements. An agreement like this would force a bank to write valuesFor their assets, which is a situation that many consider undesirable. Several governments have tried to buy and sequence these assets to deal with their economic systems in 2008 and 2009, but such agreements were limited by banks who were not willing to act, along with government officials who questioned wisdom to spend money on such assets.