Because a bad-bank bank has a difficult time gaining deposits for funding, it also has a difficult time devising an optimal strategy to manage and dispose of bad assets.

Question

Quizplus · Accepted Answer

A bad bank's primary function is to manage and dispose of bad assets taken on from another bank's balance sheet, not to gain deposits for funding. Its focus is on managing non-performing assets, not traditional banking operations like deposit gathering.

Because a Bad-Bank Bank Has a Difficult Time Gaining Deposits