Trouble with Bail Out
While the bailout is seen as a good thing for the most part there can be some issues. First of all the wholesale markets that have closed lenders can outbid each other. This means that they could in effect drive up the interest rates and create a wider economic issue, even though the Bank of England is trying to rectify the issues with rate cuts in order to stop a recession.
The government must consider an agency that has the power to cut rates like the Bank in order to establish liquid funds in the money markets. In fact they are hoping for an arrangement of 10 billion pounds for repurchase agreements in order to make this happen.
The overall goal is that the Bank or other agency is able to purchase the agreements and then sell them back to the lender at a later date, for a set price rather than having the mortgages and agreements bid on to help stabilize the economy rather than creating a worse problem. The IFS is one that is asking for a separate entity from the Bank of England because the agency needs to have a larger scale to work on in the lending world.