A test run of the government's bad-loan removal plan has been shelved as officials struggle to attract both sellers and buyers.

The Federal Deposit Insurance Corp. had planned the test of its Legacy Loans Program for June, but a host of issues have arisen, including congressional restrictions on participants and the persistent challenge of pricing loans to be disposed through government auctions. Moreover, a consensus is growing that as bank capital positions improve and the values of some written-down assets bounce back, the need for the program has subsided.

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