Major banks have abandoned plans to set up a bailout fund for subprime-related debt, mainly because not enough banks were willing to participate.
The planned fund, which was proposed in October by top U.S. banks--including Citigroup , Bank of America and JPMorgan Chase --was intended to buy the assets of ailing so-called "Structured Investment Vehicles" in order to prevent a fire sale of billions of dollars worth of shaky debt.
But a source close to the situation told CNBC that the fund is being dropped because of a lack of interest from banks in contributing to the fund and a lack of high quality assets that these SIVS were willing to sell. Many banks also are taking these SIVs on their books, making a bailout fund less necessary.