Media speculation suggests the Government has been advised to create a toxic asset company to remove bad loans from the banks. The proposal could involve loan write-offs which match or are more severe than the banks' worst case scenarios.
It is reported that economist, Dr Peter Bacon, has advised the the establishment of a bad debt company would take problem loans off the banks' balance sheets and free up lending.
Dr Bacon was hired by the government in February to work on a plan to remove bad bank loans. Reports suggest that the kind of bank rescue package recommended by Bacon has been endorsed by the IMF.