Plans to pool toxic assets into a U.S. government-owned bank may have encountered a problem, CNBC is reporting.

On Tuesday, stock markets rallied on hopes the 'bad bank' would help clear up the problems that a plaguing balance sheets.

The original report and the follow-up were from CNBC's Charlie Gasparino. Late Thursday, he said officials are holding round-the-clock meetings with senior bank executives about the plan and are unsure how it could work.

He said the announcement of any 'bad bank' is likely weeks away and may not even occur.

Stock markets in Asia and Australia declined about 0.5% immediately following the report. In foreign exchange, the Japanese yen and U.S. dollar rallied on safe haven flows.

By Adam Button
©CEP News Ltd. 2009