June 05, 2009

The rush of capital into the banking industry over the past month is allowing firms to postpone the painful process of selling devalued mortgages and other troubled assets, a step many financial experts still consider necessary to fully revive lending.The Federal Deposit Insurance Corp. said Wednesday that it would suspend indefinitely the launch of a program to finance investor purchases of banks' troubled loans because few companies were interested in selling.

A related Treasury Department program to finance purchases of mortgage-related securities remains on the drawing board months after both were announced with fanfare.The FDIC decision marked a victory for the banking industry, which has argued that such a program would transfer profit from banks to investors at public expense.