The government is also being forced into considering a second bailout for the banks as the lending drought worsens. Under one proposal, a ‘bad bank’ would be created to allow the banks to dispose of bad debts or ‘toxic assets’ and swap them for government bonds. The bad bank would manage the debt and dispose of it without worsening the mainstream banking system. Talking on TV yesterday, Gordon Brown tried to play down the possibility of a second bank recapitalisation, but other options being looked at to restore lending levels include further cash injections or offering banks cheaper state guarantees to raise money privately.