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"Until the asset overhang is reduced, the uncertainty will continue," says Brad Hintz, an analyst at Sanford Bernstein.
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For BP, the Gulf of Mexico accident continues to overhang, with asset sales impacting production," he said.
There remains a giant overhang of assets waiting for liquidation.
So there's a huge overhang of assets that need to be cleaned off the balance sheets of lenders.
The financing shortfall from the lack of securitization left a funding hole of about US$2 trillion and the market is still damaged from an overhang in legacy assets.
"The banks with this overhang of bad assets, and all the litigation, those are the ones with the big trading operations where we had the problems, continue to have the problems," Bair said.
Pessimists point to Japan's travails as a lesson in how a deflating asset-price bubble and a vast overhang of debt can defeat all that monetary and fiscal policy can throw at it.
The decline in asset values was exacerbated by the large overhang of debt, which dragged down the economy and stifled the recovery.
The Legacy Loans Program: To cleanse bank balance sheets of troubled legacy loans and reduce the overhang of uncertainty associated with these assets, the Federal Deposit Insurance Corporation and Treasury are launching a program to attract private capital to purchase eligible legacy loans from participating banks through the provision of FDIC debt guarantees and Treasury equity co-investment.
The main source of this cost is "debt overhang". When a bank finances the purchase of an asset, it effectively transfers some of the value of the asset to its legacy creditors, who now have more backing for their debt claims.
It shows that at $1.7 trillion outstanding and wrapped into various issues or vehicles containing other assets, sub-prime spawned a non-investment grade debt overhang that is too large to be absorbed by the $2 trillion junk bond and hedge fund sector.
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CEO of Professional Science Editing for Scientists @ prosciediting.com