OK, so deflation is the worry. Banks have swung from lending mania to lending depression. They fear to lend to business, because they expect business to tank because of the recession. In taking this line, they are helping to bring the recession about.
Not enough new money is coming in to the economy, so the amount available to make purchases begins to fall. Demand falls, so products stack up, so prices fall. People notice this, and defer purchases in hope of getting them cheaper later on. So a deflationary spiral is established, and the economy slows down further.
Meanwhile, out in the real world, the real economy, there is still a crying need for work in saving and healing the environment, primarily in energy conservation and renewables. This project needs money.
If the banks are too feeble to lend the necessary money, we must look for other sources. One way is by setting up renewable energy funds, attracting private investment for what is, after all, a no-brainer choice. Sure this pulls money out of the banks, but hey, that's the market...
The other way is for the Government to supply the money directly. October 2008 has proved that the Government is the ultimate guarantor of the banking system. Why in the name of all that is reasonable should the Government have to borrow from banks when it can issue money to invest in our real future?