A U.S. government plan to rid banks of bad
loans is stalling and may soon be put on hold,
the Wall Street Journal reported on Wednesday,
citing people familiar with the matter.

The Legacy Loans Program, which is being
crafted by the Federal Deposit Insurance Corp,
is part of the $1 trillion Public Private
Investment Program the government announced in
March to encourage banks to sell securities and
loans weighing on their balance sheets to
willing investors.

Prospective buyers and sellers have expressed
reluctance to the FDIC about participating for
fear the program's rules will change in a
political atmosphere hostile to Wall Street,
the Journal reported. It also said that some
banks that might have sold troubled loans into
the program earlier in the year have become
less eager as they regained a sense of
stability.

FDIC spokesmen were not immediately available
for comment.