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."
- (banking, economics) 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.