The bailing out of Northern Rock was a misuse of taxpayer's money. The FSA aleady guarantees the first £2,000 and then 90% up to £33,000 of any deposits. The further guarantees that the bank was making just makes it more likely that banks will be even more reckless in the future. If a bank is badly run, it must be allowed to fail. People with over £33,000 shouldn't be protected by the taxpayer, they are investors, and investments sometimes fail.

I don't know how mortgage holders are affected. I expect the mortgages would be sold to another company and things would carry on as before.