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Europe Tells Banks to Come Clean on Bad Assets

European regulators are telling banks at the center of the global financial crisis that it is time for them to become part of the solution.

The European Commission laid out guidelines for a common EU approach to the crisis in Brussels Wednesday.

Regulators say EU countries should restore confidence by setting up a so-called "bad bank" to purchase the investments that have put banks in danger of failing. They say that would allow banks to start lending to consumers and businesses again and help spark economic growth.

But European Union Competition Commissioner Neelie Kroes says for the plan to work banks must be honest about the size and scope of the problem.

She also says banks must help pay the costs of the program.

The guidelines make clear that some banks could be nationalized.

Officials are also looking at the possibility of creating two, new pan-European bodies to provide adequate oversight for the financial system.

A report by a group headed by former French central bank governor Jacques de Larosiere says the new organizations would not replace existing national regulators. Instead, they would oversee risk and provide early warnings about potential problems.

The proposals will be debated by EU members in advance of a meeting of major industrialized and developing nations (the G-20) in April.

Some information for this report was provided by AFP, AP and Reuters.