TERN

America's Banks: Are They Really Insolvent?

If the market valuation (or lack of) "toxic" assets is at the heart of the problem, and the current market for these assets is not providing realistic pricing, then the US would do well to look at the Danish system of mortgage financing, where the home owners themselves have the option of buying back their debt.

If the CDO's could be untangled enough to yield lists of home owners that owe the debt, surely many of them would be highly interested to buy their debt off at more than 30 ct on the dollar!
Online auctions would quickly show the true market values, and this would help all banks in the process of "mark to market".

Temporary nationalization might be the blunt force needed to create this new and functioning market, but it might not even be necessary.

Adopting the Danish model would also go a long way to prevent such a mess in the future.