Moves to create one "big bad bank" to wipe out all the toxic mortgage money owed by US banks got a mixed reaction yesterday with concerns that taxpayers will suffer.

The US Government is set to make a massive payout to cover the hundreds of billions of dollars of bad debt from defaulting and sub-prime mortgages.

Initial responses on the markets were positive, with prices rising as the hoped-for recovery appeared to start.

The proposed deal is similar to one reached to sort out an earlier savings-and-loans crisis in the US in the late 1980s and early 1990s. That led to the creation of a body called the Resolution Trust. The trust bought and eventually sold countless properties from failed savings-and-loan companies totalling hundreds of billions of dollars - a dramatic move said to have cost American taxpayers more than $100bn.

At Glasgow University, economics expert Professor Ronald MacDonald warned yesterday that taxpayers were again in danger of becoming victims of a dangerous tendency to bail out companies on the brink of disaster.

He said: "In principle, purging the bad debt is good because clearly the crisis is much deeper than most people thought. From the perspective of trying to calm things down and get a more stable financial system, it's got to be good too. But if we let banks create these financial bubbles and the government just steps in and pays off the bad debt that is not a good message. They really have to tighten up regulation so that it doesn't happen again because ultimately it's the taxpayers who are left footing the bill."

Business leaders in Scotland also warned that although the move showed a welcome commitment to ending the current crisis, it would not restore public faith in banks.

Graham Bell, of the Scottish Chambers of Commerce, said: "I think the problem with bail-out solutions is that's how everybody sees them and the real problem we have is actually lack of confidence.

"We have seen brave attempts by the government to do something but nearly every single one of them is a case of too little, too late.

"The collapse of HBOS is like a vortex, it's a magnification of the problems in the US mortgage market which have grown in consequence across the world and so the fact that the government and regulatory authorities are willing to put out a massive lifeboat with billions of dollars shows that they are absolutely dedicated to stopping this now . . . But we need to relaunch the Ark - it's as though someone went around it and pulled all the nails out."

Highlighting the reality on the still jittery high street, he added: "The best thing for Lloyds TSB and HBOS to do is to make it clear as soon as possible that job losses will be minimal so that it does not become a panic situation."

US Treasury Secretary Hank Paulson is leading the massive bid to rescue banks from the bad assets at the centre of the crisis which sent Wall Street giants Lehman Brothers crashing out of the market just days before the dramatic takeover of HBOS.

Mr Paulson said he hoped to have a solution "aimed right at the heart of this problem".

The move follows a decision by regulators in both the US and the UK to bring in a temporary ban on short selling, preventing investors from deliberately borrowing stocks in a company to sell in the hope that it will lose value and they can buy it back more cheaply and return it, keeping the difference as profit.